Nigeria Continues On Crypto Crackdown; Freezes Trading Accounts

Table of Contents

• Crypto Trading Incurs Heavy Penalties
• CBN Keeping Its Word Against Crypto Trading
• Nigerian CBDC Launched In October

The Central Bank of Nigeria (CBN) has penalized traders participating in crypto trading activities by freezing their trading accounts. 

Crypto Trading Incurs Heavy Penalties

Two individuals, Nnamdi Francis Okereke and Nwaorgu Kingsley Chibuzor, and a company called TVS Hallmark Service Limited, have had their crypto trading accounts closed as per a directive from the Central Bank of Nigeria. 

In a Post-No-Debit circular signed on November 3 by the Director of Banking Supervision, J.Y. Mammanand, the commercial banks were instructed to close the accounts of these individuals and the company for allegedly trading in cryptocurrencies. 

The circular quotes, 

“You are hereby directed to close accounts of the underlisted bank customers and place the funds in the accounts in suspense accounts for engaging in cryptocurrency trading in contravention of CBN Circular BSD/DIR/PUB/014/001 dated February 5, 2021.”

As per protocol, the funds in the accounts will be hereby transferred into “suspense accounts.” 

CBN Keeping Its Word Against Crypto Trading

The CBN circular that is being mentioned in the memo refers to the announcement by the Central Bank of Nigeria on February 5 that prohibited all Nigerian financial institutions from transacting with crypto exchanges in the country. The authority also ordered Nigerian digital currency traders to halt all crypto-related activities immediately. The crackdown on the country’s cryptocurrency industry was an attempt to curb issues of money laundering and terrorism financing.

According to the Governor of the Central Bank, Godwin Emefiele, most of the crypto transactions in the country were illegal and used to fund illicit activities. Therefore, protecting customers’ funds and nipping an illegal market funded by cryptocurrency in the bud were the two main reasons cited behind the ban. However, the Nigerian crypto market, which was extremely prolific prior to the ban, continued to emerge as the biggest crypto industry in Africa even after the ban. 

Nigerian CBDC Launched In October

The country is not entirely shying away from all forms of digital currency. Back in October, Nigeria launched its very own central bank digital currency (CBDC) called the eNaira, with the purpose of complementing the country’s physical currency. The eNaira, which was developed by the fintech company, Bitt, can be used via two easily downloadable smartphone apps - the eNAira speed wallet and the eNaira merchant wallet. In addition, all Nigerian banks had received guidelines for the non-interest-bearing CBDC, clarifying its operational module and the design. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.