Is Cryptocurrency trading prohibited in Nigeria or just a rumor?

By: Damian Okonkwo

There are a lot of uncertainties today surrounding the status of cryptocurrency trading in Nigeria today. This scenario has been brought about with the popular directives given to the Deposit Money Bank (DMB) operating in Nigeria by the CBN in on February 5, 2021.

It is good to recall that the CBN released a ruling that ordering all DMBs in Nigeria to stop facilitating crypto transactions and refrain from transacting business with entities engaging in cryptocurrency trading. Of course in the past it was possible to buy cryptocurrency of one's choice from any exchange operating in Nigeria using one's ATM card online but today it is no longer possible as the banks have been requested to withhold such services.

The directives further instructed all banks and financial institutions to close accounts of individuals and any entity found engaging in cryptocurrency dealings with a stern warning to the banks that any breach of these directives will attract severe regulatory sanctions.

This has brought a mixed feeling and misinterpretation of the statement by the CBN regarding the state of Cryptocurrency trading in Nigeria. Thus some said, cryptocurrency has been made illegal with this directives and has become an offence in Nigeria.

However, the general conception that Cryptocurrency trading has been banned in Nigeria is really a wrong one. This is because the CBN only banned it's subordinate statutory body known as the Deposit Money Banks from helping their depostors to buy and sell crypto currencies through them. This means the individual is now left alone to find his own way of legally buying and selling crypto currency within and outside the country. This means I can trade crypto currency but can't sell it easily through the bank. Maybe I can consume it at the end as consumable just as the France court once classified cryptocurrency (Bitcoin) as a consumable asset which is bought and consumed on the spot.

As the obscurities surrounding the status of cryptocurrency trading in Nigeria widened last year, it is good to recall the second insight provided by the CBN representative as a way of clarifying the directives given to the banks on cryptocurrency transactions.

Speaking on behalf of the banks governor Godwin Emefiele, the Deputy Governor Adamu Lamtek said the Central Bank of Nigeria had never banned cryptocurrency activity in the country but rather restricted the banks from facilitating it. Probably a way of making cryptocurrency transactions a very tedious one for the individual and other entities indulging in it .

According to Lamek, the CBN did not place restrictions from use of cryptocurrencies and we are not discouraging people from trading in them, “What we have just done was to prohibit transactions on cryptocurrencies in the banking sector.”

This position of the CBN was disclosed by Lamtek while he was speaking at the 30th seminar for Finance Correspondents and Business Editors held in the countrys capital, Abuja.

Finally, it is good to note that there is no law in Nigeria currently proscribing cryptocurrency trading by the individual apart from the CBN ban on the DMBs only. Of course the Nigerian government had officially shown the way to trading cryptocurrency in Nigeria by approving a Central Bank Digital Currency daubed e-naira in October last year. Today Nigeria ranks the fourth country in the whole world were cryptocurrency is the most traded by the citizens.