Nigerian fintechs crack down on crypto, users face account blocks

The CBN's attitude to crypto has been inconsistent in recent years and the crackdown contradicts a decision taken in 2021 to facilitate crypto account opening.

Some Nigerian fintech platforms have warned users against connecting their platforms with crypto transactions or face heavy sanctions amid the countrys ongoing efforts to regulate cryptocurrency.

Nigerian fintech firms Moniepoint, PalmPay and Paga have notified customers that their accounts will be blocked if they facilitate crypto transactions with them. This comes after the Central Bank of Nigeria (CBN) ordered some new banks, including Moniepoint, to stop onboarding new customers.

In the notification issued to customers on May 2, 2024, Moniepoint said:

“In line with CBN regulation, we will close the account of anyone engaging in crypto or other virtual assets transactions and share their details with relevant authorities.”

This notification marks a reversal of the Central Bank of Nigerias previous announcement to lift the crypto ban imposed in 2021. In the CBN circular issued in December 2023, the central bank directed financial institutions to facilitate account opening, provide designated settlement services, and act as intermediaries for firms engaging in crypto asset transactions.

Source: Tola Joseph Fadugbagbe

The December circular also stated that it supersedes the one from 2017 and the one from 2021, which restricted banks and other financial institutions from operating accounts for cryptocurrency service providers.

An X user, who is also a PalmPay customer, said his account was frozen and would only be unfrozen if he agreed to sign an agreement mandating him to abstain from crypto transactions.

Paga also emailed customers, stating that it is licensed by the CBN and that it is committed to compliance with all CBN regulations.

“Pursuant to the CBN circular with reference FPR/DIR/GEN/CIR/06/10, we wish to remind you that dealing in or facilitating transactions in cryptocurrency and other virtual currencies is not permitted.”

The circular referenced by Paga is from 2017, and it warns banks and other financial institutions about their relations with crypto exchanges and customers who transact cryptocurrency.

The CBN had earlier denied a report saying it issued a directive requiring all banks and financial institutions to identify individuals or entities engaging in transactions with cryptocurrency exchanges and to ensure that such accounts are put on Post No Debit (PND) instruction — a directive issued by a bank or financial institution to restrict certain transactions on a customers account — for six months.

The alleged circular also stated that regulated financial institutions engaged in crypto or facilitating payments for crypto exchanges are prohibited.