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Mixed response, unease over Nigeria’s crypto crackdown

A directive from the Central Bank of Nigeria (CBN) prohibiting financial institutions operating in the country from facilitating cryptocurrency exchanges has been met with mixed response.

Effective immediately, institutions are instructed “to identify persons and/or entities transacting in or operating cryptocurrency exchanges within tier systems and ensure that such accounts are closed immediately.”

Aside from cryptocurrencies’ risk exposure to the public, CBN did not provide any other reason for the move, prompting public speculation.

ThisDay newspaper reports that the CBN took the action following a US Federal Bureau of Investigation (FBI) warning to the Nigerian government that some fraudsters were using cryptocurrencies to transfer funds obtained illegally from the COVID-19 stimulus packages meant for US residents.

According to the tabloid, the FBI claimed fraudsters have sent millions of dollars to Nigeria and have avoided detection by using cryptocurrencies which made it difficult for relevant authorities on both sides to trace the illicit monies.

For a former presidential aspirant, Adamu Garba, said the CBN move is to encourage “those who might have lost their monies through a shortcut business called crypto” to invest in real assets like cows for their “huge returns on investment.” He states on Twitter that the cow ranching business is “more lucrative than all cryptocurrencies combined.”

Former Vice President Atiku Abubakar believes that the CBN ban will “close up” the Nigerian economy, despite the socio-economic pressure due to border closure and COVID-19.

He said:“This is definitely the wrong time to introduce policies that will restrict the inflow of capital into Nigeria, and I urge that the policy to prohibit the dealing and transaction of cryptocurrencies be revisited.”

Abubakar cited a National Bureau of Statistics report which shows that foreign capital inflow into Nigeria is at a 4-year low - from US$23.9-billion in 2019 to US$9.68-billion in 2020.

“It is possible to regulate the sub-sector and prevent any abuse that may be inimical to national security. That may be a better option, than an outright shutdown.”

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