Cryptocurrency Ban: Banks Close Accounts Link to Cryptocurrency Traders in Nigeria

The Central Bank of Nigeria has given an order to commercial lenders to close the accounts of two individuals and one company. These accounts were ordered to be closed on the suspicion that they were trading cryptocurrencies.

On February 5 2021, the Central Bank issued a circular to commercial banks and other financial institutions, giving a directive that transactions in cryptocurrencies and the facilitation of payment for cryptocurrency exchanges were thereby prohibited.

The CBN went further to instruct financial institutions and banks to identify individuals or other entities that are involved in the exchange of cryptocurrencies or transact in cryptocurrency and close the accounts.

That instruction was followed up by the apex bank in a memo dated November 3 2021. The memo stated clearly that those accounts were in direct violation of the contents of the circular issued on February 5, which was eventually confirmed by the regulator. The instructions in the memo stated that the funds recovered from the closed accounts should be placed in ‘suspense accounts’.

The initial circular issued in February elicited varied reactions from the general public, a good number of which were negative and condemnatory of the CBN’s actions. Many were concerned about the negative implications that the directive would have on the country’s fast-growing cryptocurrency market, and the innovation in Financial Technology.

One very common complaint was that the government was using that directive to crack down on the young Nigerians who had resorted to cryptocurrency trading as a means to leave poverty behind. The CBN was accused of deliberately trying to steal the livelihood of many young Nigerians.

These complaints have now returned on Social Media, following the instructions to close the accounts of the two Nigerians suspected to be trading cryptocurrency.

Many people have accused the governor of the Central Bank of Nigeria, Godwin Emefiele as being unnecessarily harsh on the Nigerians who were probably just chasing a means of livelihood. Following the issuance of the circular in February, Emefiele stated that the cryptocurrency ban was mainly due to the existence of illegal operations (fraud, etc) using cryptocurrency.

Some Nigerians were however unsatisfied with the explanation, convinced that the government did not need to close cryptocurrency to all citizens in order to stop the illegal activities of the relatively few.