The Central Bank of Nigeria (CBN) has fined 3 of the country’s commercial banks for transgressing restrictions on cryptocurrency trading which had come into force about a year now. The affected banks are Stanbic IBTC, Access Bank, and United Bank for Africa (UBA), and were all fined a total of ₦800 million (~$1.9 million) for operating accounts employed for crypto trading activities.
Standard Bank Group Ltd was fined ₦200 million (~$481,000) for 2 accounts alleged to have been used for crypto transactions. This fine was disclosed during an investor conference call on Tuesday by the Chief Executive Officer, Wole Adeniyi. Access Bank, as well, was fined ₦500 million (~$1.2 million) for failure to shut down its customers’ crypto accounts, according to a filing with the Nigerian Exchange Ltd; and United Bank for Africa (UBA) was fined ₦100 million (~$240,000) for digital currency transactions by a customer.
The crypto debacle in Nigeria
Early last year in February 2021, the Nigerian apex bank had directed that all commercial banks and financial institutions were to close all customer accounts that had dealings in cryptocurrency, on the back of claims that the digital currency was being utilized for money laundering and terrorism. This directive was in line with a 2017 circular that stipulated that commercial banks were “not to use, hold, trade and/or transact in cryptocurrencies “.
Osita Nwanisobi AG Director, Corporate Communications of CBN had clarified in a statement that since crypto platforms enabled its users value anonymity, obscurement and concealment, it was difficult to track and regulate.
“It is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.”Osita Nwanisobi, AG Director, Corporate Communications, CBN
While the Central Bank had not banned cryptocurrencies, it had severed any links between existing crypto exchanges and the Nigerian populace. As such, any Nigerian bank or fintech aiding these linkages would inevitably face the hammer of the regulatory financial institution for defaulting on its regulations. Many crypto exchange platforms, finding loopholes within the regulatory redtapes have resorted to peer-to-peer (P2P) exchanges to facilitate cryptocurrency transactions, along with utilizing stablecoins.
In September 2021, the apex regulator had also launched the the e-Naira, the country’s digital currency, following a three-year development phase for Africa’s first digital currency. On the back of this, Nigeria joined the rank of over 14 countries globally at the pilot stages of their own central bank digital currencies (CBDCs), including China, Sweden, and South Korea, with many other countries that are at the stages of consideration of introducing a digital tender.