CBN Denies Cryptocurrency Ban Rumors, Emphasizes Illegal Tether Monitoring

The Central Bank of Nigeria (CBN) has denied issuing a directive requiring banks and financial institutions to identify and freeze accounts associated with cryptocurrency exchange transactions. Confusion arose after the CBN initially denied the story but later claimed the allegations were false. The alleged directive prohibited regulated financial institutions from engaging in crypto transactions and facilitating payments for crypto exchanges, contradicting an earlier ban lifted in December 2023.

Central Bank of Nigeria Denies Directive to Restrict Cryptocurrency Transactions

Update: 11:45 AM UTC

The Central Bank of Nigeria (CBN) has vehemently refuted a report alleging it issued a directive instructing banks and financial institutions to identify and restrict accounts associated with cryptocurrency transactions. The bank has categorically denied such a directive.

Initial Confusion and Clarification

Initial reports emerged claiming the CBN had issued a circular requiring banks to identify individuals or entities engaging with cryptocurrency exchanges and to impose a six-month "Post No Debit" (PND) restriction on their accounts. This instruction would have prevented account holders from withdrawing funds or making payments using affected accounts.

However, in a subsequent statement, the CBN clarified that the allegations were indeed false. The bank emphasized that it has not issued any such directive and will continue to monitor and regulate cryptocurrency activities in accordance with existing policies.

Focus on Illegal Tether Transactions

The CBN has reiterated its stance on illegal cryptocurrency transactions, particularly those involving the stablecoin Tether (USDT) on unlicensed platforms. The bank has warned that it will take action against individuals or entities engaging in such activities, especially through peer-to-peer (P2P) methods.

Contradictory Circular Emerges

Amidst the confusion, an alleged circular from the CBN surfaced, stating that regulated financial institutions are prohibited from dealing in cryptocurrencies or facilitating payments for crypto exchanges. This contravenes an earlier ban lifted in December 2023, which allowed banks to process transactions for crypto exchanges.

CBN's Evolving Stance on Cryptocurrencies

The CBN's position on cryptocurrencies has undergone significant shifts in recent years. In 2021, the bank imposed a comprehensive ban on banks engaging with digital currencies. However, in December 2023, it lifted the ban, acknowledging the growing global adoption of cryptocurrencies.

Government Scrutiny of Crypto Platforms

Despite the lifting of the ban, the CBN remains cautious about cryptocurrency activities. The recent sharp devaluation of the naira and rising inflation have prompted the government to scrutinize platforms offering cryptocurrency services.

Binance Under Pressure in Nigeria

Binance, a major global cryptocurrency exchange, has faced intense scrutiny in Nigeria. In 2023, the CBN raised concerns about "suspicious financial transactions" linked to Binance Nigeria, alleging that $26 billion had flowed through the platform from unidentified sources.

Arrest and Extradition of Binance Executives

Tigran Gambaryan, a senior Binance executive based in the United States, was detained in Nigeria in connection with money laundering charges arising from meetings with Nigerian officials regarding Binance's regulatory compliance.

Another Binance executive, Nadeem Anjarwalla, who also attended the meetings, escaped custody and fled to Kenya, where he is facing extradition proceedings.

Conclusion

The Central Bank of Nigeria has firmly denied issuing any directive to restrict cryptocurrency transactions. The bank continues to monitor and regulate cryptocurrency activities, while emphasizing its commitment to combating illegal transactions and ensuring the stability of the financial system.