-
Severe sanctions await erring institutions
BY EDMOND ODOK – The Central Bank of Nigeria (CBN) has directed all Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs) and Other Financial Institutions (OFls) to shut all accounts used for crypto currency operations in the country.
According to a circular with reference number; BSD/DIR/GEN/LAB/14/001 and dated Friday, February 5, 2021, the apex Bank ordered all financial institutions “to identify persons and/or entities transacting in or operating crypto currency exchanges within their systems and ensure that such accounts are closed immediately”.
It therefore warned that any financial institution that violates the directive will face “severe regulatory sanctions”.
The CBN’s statement further warned that; “dealing in crypto currencies or facilitating payments for crypto currency exchanges is prohibited”.
Jointly signed by the Director of Banking Supervision, Bello Hassan and Director, Payments System Management Department, Musa I Jimoh, the circular said the directive takes immediate effect and strict compliance must be observed by all concerned.
In what clearly indicates CBN’s seriousness in ensuring strict compliance with the new directive, the statement observes that in recent past the apex bank had “cautioned Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs), Other Financial Institutions (OFls) and members of the pubic on the risk associated with transactions in crypto currency refers”.
A crypto currency is a virtual or digital currency that appreciates or depreciates on the impulses of market forces.
Meanwhile, as reactions continue to trail the CBN’s decision, The Nation newspapers reports that some social media influencers like Japheth Omojuwa believe “this letter, if it stands, will literally kill Nigerian companies and also harm foreign investment”.
For Omojuwa, “investors from mostly the United States have, in spite of the risks involved in investing in our country, invested in Nigerian Fintech companies that this letter clearly targets”.
“This is not going to be a case of losing some money, this is a case of companies closing shop. Companies operating on investment from abroad.
“That’s before you address the effect on everyday Nigerians trading legitimately and looking to make ends meet in the midst of an excruciating environment and economy”, he said.
Pointedly, Omojuwa accused the CBN of deliberately being out “to kill businesses” with the new directives
On his part, Professor Uwaleke Uchenna Joseph of Nasarawa State University, Keffi, also told The Nation newspaper that this directive may be linked to the fact that “the CBN and the Securities and Exchange Commission (SEC) are not yet ready with regulations guiding crypto asset trading platforms operations in Nigeria.”
Uwaleke, who is an Associate Professor of Accounting and Finance as well as current Head of Banking and Finance Department urged the public to see this directive “in the light of the risk that unregulated crypto currency trading could pose to the financial system.”
