Nigerian Fintech Firms Warn Users Against Crypto Transactions Amid Regulatory Attempts
Summary:
Nigerian fintech firms Moniepoint, PalmPay, and Paga have warned users against engaging in cryptocurrency transactions, indicating such activities could lead to account closure. This move follows the Central Bank of Nigeria's mandate to halt onboarding new customers and comes despite the previous intent to lift the crypto ban imposed in 2021. Users have reported account freezes until agreements to refrain from crypto transactions are signed. Both Moniepoint and Paga assert compliance with all CBN regulations. The CBN has further denied directing all banks and institutions to issue six-month Post No Debit orders on accounts linked to cryptocurrency exchanges.
Nigerian fintech companies have issued a stern warning to their users about the consequences of linking their accounts with cryptocurrency transactions, amidst the country's ongoing attempts to regulate the crypto sector. Fintech companies Moniepoint, PalmPay and Paga have alerted their users that any accounts involved in crypto-related transactions would be suspended. This advisory follows the Central Bank of Nigeria's (CBN) directions to several future-generation banks, including Moniepoint, to halt the enrolment of new customers.
On May 2, 2024, Moniepoint cautioned its customers stating, “As per the CBN rules, any account holder involved in transactions of crypto or other virtual assets will face account closure and their details will be handed over to the requisite authorities."
This advisory signals a repositioning from the CBN's earlier promise to lift the crypto ban that was enforced in 2021. In a circular from December 2023, the central bank had recommended financial institutions to open accounts, offer dedicated settlement services, and play a mediator for firms partaking in crypto asset transactions.
According to Tola Joseph Fadugbagbe's report, the December circular overrode the one from 2017 and another from 2021, both of which restricted banking and financial institutions from holding accounts for cryptocurrency service providers. One PalmPay client reported their account being locked until a formal agreement was made to refrain from engaging in any cryptocurrency transactions.
Paga also sent an email reminder to its customers that it is a CBN licensed institution and that it abides by regulations set by the CBN, saying "Pertaining to the CBN notice with reference FPR/DIR/GEN/CIR/06/10, we hereby remind you that involvement in, or enabling transactions in cryptocurrency and other virtual currencies are strictly prohibited."
This notice from Paga points back to a 2017 circular advising banks and other institutions against being affiliated with crypto exchanges and cryptocurrency users. Earlier, the CBN rebutted a claim stating that they had ordered all banks and institutions to identify individuals or companies transacting with cryptocurrency exchanges and that these accounts are subject to a Post No Debit (PND) order for six months.
The said directive also prohibited financial institutions from engaging in crypto transactions or facilitating payments for cryptocurrency exchanges. Moniepoint was approached by Cointelegraph for comments on these developments, but no response was received by the time of this report.
Published At
5/3/2024 11:43:45 AM
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