MPC: CBN mute on cryptocurrency despite SEC regulation of digital assets

The Central Bank of Nigeria has remained mute on cryptocurrency despite Nigeria’s Securities and Exchange Commission issuing cryptocurrency regulations.

The CBN’s silence at the Monetary Policy Meeting (MPC) meeting on the subject means that cryptocurrency remains a prohibited transaction for banks, with penalties imposed by the apex bank.

Market players and cryptocurrency enthusiasts who were anticipating the apex bank’s response to the SEC law were met with deafening quiet, indicating that the CBN’s attitude has not altered.

What you should know

While the SEC effectively gave the industry legal stature, the Nigerian central bank, on the other hand, has taken a strong stance on cryptocurrency for the past five years, with the first blow delivered on January 12, 2017.

  • The prohibition was issued by Mr. Kelvin Amugo, Director, Financial Policy and Regulation Department, CBN, who noted that it was required due to the money laundering and terrorism financing risks inherent in virtual currency operations.
  • In 2018, the CBN issued another statement reiterating that cryptocurrencies are not a legal tender and as such are illegal.
  • The apex bank also sent another reminder on the 5th of February 2021 to Nigerian commercial banks to stick to the 2017 derivative of the crypto ban.
  • The Securities and Exchange Commission (SEC) responded that “ there is no policy conflict between the capital market apex regulator and the Central Bank of Nigeria (CBN) over the ban placed on Cryptocurrency transactions in the banking industry.”
  • SEC also stated, “As regards our recent policy pronouncement, it is important to clarify that the CBN circular of February 5, 2021, did not place any new restrictions on cryptocurrencies, given that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies,”

Why this matters

  • Although the Securities and Exchange Commission insists there is no conflict of interest with the Central Bank, the contradictory policy creates a quandary for cryptocurrency exchanges looking to conduct business in Nigeria.
  • Nairametrics spoke to a cryptocurrency exchange executive who stated that dual policy created confusion in the space.
  • “The SEC regulation requires exchanges to deposit money in the bank but if the transaction is banned what would we do?“ he asked.
  • Nairametrics also contacted various Nigerian banks, who stated that they had not received any new message from the CBN regarding cryptocurrency and would continue to classify the asset under prohibited banking transaction.

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