The Nigerian crypto community faced uncertainty after a misleading report suggested the Central Bank of Nigeria (CBN) froze accounts linked to digital assets. Although the bank initially denied the claim, confusion arose when that denial was removed. Eventually, the Central Bank clarified its stance, assuring Nigerians it does not currently restrict cryptocurrency transactions.
The Central Bank of Nigeria faced speculation regarding its stance on digital assets. Initially, reports claimed the CBN directed banks to identify and restrict accounts linked to digital assets transactions through a “Post No Debit” (PND) restriction, preventing withdrawals or payments. Though the CBN initially denied the directive, its subsequent deletion sparked rumours of a potential policy change on digital currencies.
The Central Bank of Nigeria made it clear that stories about printing new digital currency were untrue. This agrees with their policy reversal in December 2023, allowing banks to process payments for crypto exchanges after previously banning such transactions.
CBN Adjusts Crypto Policy Amid Naira Fluctuations
Nigeria’s financial system has a multifaceted relationship with digital currencies. Last year, the Central Bank of Nigeria prohibited banks from dealing with virtual currencies. They cited potential risks to economic stability. However, widespread global crypto adoption prompted a policy shift. By late 2023, the CBN lifted the ban on crypto exchange transactions.
The Nigerian government’s efforts were driven by the naira’s decline and soaring inflation rates, around 29.9% in April 2024. This move aimed to address unofficial exchange rates set by certain crypto platforms, contributing to the local currency’s devaluation. With clear objectives, the authorities sought to stabilize the naira’s value and control its circulation through regulated channels.
The Central Bank of Nigeria has flagged concerns about money laundering through crypto exchanges. In 2023, the bank identified $26 billion in suspicious financial transactions flowing via Binance Nigeria. These concerns heightened after Binance executive Tigran Gambaryan’s arrest on charges related to money laundering.
The Central Bank has stated its stance clearly, but some uncertainties persist. A court case against Gambaryan, along with the potential extradition of Binance’s Nadeem Anjarwalla, shows the complexities firms face in Nigeria’s digital assets landscape. Despite the clarified stance, navigating regulations remains intricate for crypto firms.
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