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Cryptocurrency Is Not Legitimate Money,’ Says CBN Governor, Emefiele

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Governor, Central Bank of Nigeria (CBN) Godwin Emefiele says the bank’s decision to prohibit deposit money banks, non-banking institutions and other financial institutions from facilitating trading and dealings in cryptocurrency is in the best interest of Nigerian depositors and the country’s financial system.

Speaking during his appearance on Tuesday before the joint Senate committee on banking, insurance and other financial institutions; ICT and cybercrime; and capital market, Mr Emefiele also said the bank’s actions were not in any way inimical to the development of FinTech or a technology-driven payment system.

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On the contrary, he noted that the Nigerian payment system had evolved significantly over the past decade, surpassing those of many of its counterparts in emerging, frontier and advanced economies boosted by reforms driven by the CBN.

Describing the operations of cryptocurrencies as dangerous and opaque, the CBN governor said the use of cryptocurrency contravened an existing law. He said given the fact that cryptocurrencies were issued by unregulated and unlicensed entities made it contrary to the mandate of the bank, as enshrined in the CBN Act (2007) declaring the bank as the issuer of legal tender in Nigeria.

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Emefiele, who also differentiated between digital currencies which central banks can issue and cryptocurrencies issued by unknown and unregulated entities, stressed that the anonymity, obscurity and concealment of cryptocurrencies made it suitable for those who indulge in illegal activities such as money laundering, terrorism financing, purchase of small arms and light weapons and tax evasion.

“Cryptocurrency has no place in our monetary system at this time and cryptocurrency transactions should not be carried out through the Nigerian banking system,” he added.

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While urging that the issue of cryptocurrency be treated with caution, Emefiele, CBN governor assured that the bank would continue its surveillance and deeper understanding of the digital space to protect the nation’s financial system.

Also speaking, the director-general of the Securities and Exchange Commission (SEC) Lamido Yuguda clarified that there was no policy contradiction between the CBN directive and the pronouncements made by the SEC on the subject of cryptocurrencies in Nigeria. He explained that the SEC made its pronouncement at the time to provide regulatory certainty within the digital asset space due to the growing volume of reported flaws.

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Similarly, the chairman of the Independent Corrupt Practices and Other Related Offences Commission (ICPC) Prof. Bolaji Owasanoye explained that cryptocurrencies posed serious legal and law enforcement risks for Nigeria due to its opaque nature and illicit financial flows, adding that the current move by the Federal Government to link national identification numbers with SIM cards attested to the fact that criminals had relied on the shield provided by anonymity to commit heinous crimes.

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