Nigerian Central Bank Imposes Restrictions on Cryptocurrency Transactions Amid Economic Challenges
Summary:
The Nigerian Central Bank has issued an order directing all banks and financial institutions to identify any account conducting transactions with cryptocurrency exchanges for a mandate of Post No Debit for six months. Crypto exchanges such as Bybit, KuCoin, OKX, and Binance have been listed as unlicensed for operations in Nigeria. The Bank also added that financial institutions engaged in facilitating payments for crypto exchanges are prohibited. This comes following the government's attention shifting to crypto service platforms due to the naira's rapid devaluation and a 29.9% inflation rate. Companies like Binance are facing scrutiny and legal challenges linked to these developments in the country's regulatory environment for cryptocurrencies.
The Nigerian Central Bank (CBN) has decreed that every bank and finance establishment must identify anyone or any entity conducting business with cryptocurrency exchanges, and those accounts must be marked with a Post No Debit (PND) command for a period of half a year. The term "Post No Debit" refers to a mandate issued by a banking institution preventing certain actions on a client's account. Under such circumstances, the accountholder is barred from executing debit transactions, preventing them from withdrawing money or making payments from that particular account.
The CBN revealed in a memo circulated to Cointelegraph that it has singled out crypto exchanges like Bybit, KuCoin, OKX, and Binance for not possessing the necessary operational licenses in Nigeria. The bank has expressed its intent to target anyone suspected of trading Tether (USDT) unlawfully on these non-complaint platforms, particularly those employing peer-to-peer (P2P) techniques.
Furthermore, the CBN emphasized that any officially supervised finance establishments involved in crypto transactions or facilitating payments for crypto exchanges are also forbidden. This stance contradicts a previously revoked ban instituted in December 2023, which allowed banks to handle transactions for crypto exchanges.
This ban was lifted by the Central Bank nearly two years following its enforcement of a blanket ban on banks interacting with digital currencies. In a press release by the CBN, they acknowledged that the growing global demand and acceptance of crypto make it unreasonable to continue the stringent limitations placed on finance establishments in 2021. However, with the rapid naira devaluation and an inflated rate of 29.9%, the government turned its attention to platforms offering cryptocurrency services, and then proceeded to disable crypto trading-related websites infamous for establishing informal naira valuations.
In 2023, the CBN scrutinized Binance heavily after expressing concern over "questionable financial dealings" happening via Binance Nigeria. Olayemi Cardoso, the CBN chief, noted that an unidentified $26 billion had been transferred through Nigeria via Binance the same year.
Binance is experiencing additional hurdles in Nigeria – its USA-based executive Tigran Gambaryan has been arrested in the nation on five charges related to money laundering stemming from a meeting with Nigerian officials concerning Binance's regulatory issues.
Nadeem Anjarwalla, another executive who went to Nigeria to discuss Binance's regulatory concerns, subsequently fled custody and was located in Kenya, from where he is facing extradition.
Published At
4/24/2024 11:54:43 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.