The Central Bank of Nigeria, CBN, has said cryptocurrencies are being used to finance illegal activities such as terrorism, purchase small arms and light weapons, and hard drugs.
The apex bank in a statement on Sunday issued in response to various comments and reactions following its recent reminder to Deposit Money Banks to desist from transacting in/and with entities dealing in cryptocurrencies.
The CBN explained that the recent regulatory directive became necessary to protect the financial system and Nigerians, including the youth population, from the risks inherent in crypto assets transactions.
“Due to the fact that cryptocurrencies are largely speculative, anonymous and untraceable they are increasingly being used for money laundering, terrorism financing and other criminal activities.
“Small retail and unsophisticated investors also face high probability of loss due to the high volatility of the investments in recent times.
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“In light of these realities and analyses, the CBN has no comfort in cryptocurrencies at this time and will continue to do all within its regulatory powers to educate Nigerians to desist from its use and protect our financial system from activities of fraudsters and speculators.”
The CBN said for those who were not conversant with the universe of cryptocurrencies, it was important to state that cryptocurrencies “are digital or virtual currencies issued by largely anonymous entities and secured by cryptography.”
It stated, “Cryptography is a method of encrypting and hiding codes that prevent oversight, accountability, and regulation.
“While there are a number of cryptocurrencies now in circulation, Bitcoin was the first to be introduced in 2009, and now accounts for about 68 percent of all cryptocurrencies.
The statement signed by the Ag. Director of Corporate Communications at CBN, Osita Nwanisobi, said the nature of cryptocurrencies suggested that its patrons and users value anonymity, obscurity, and concealment.
“The question that one may need to ask therefore is, why any entity would disguise its transactions if they were legal.
“It is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.
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“Indeed, many banks and investors who place a high value on reputation have been turned off from cryptocurrencies because of the damaging effects of the widespread use of cryptocurrencies for illegal activities.”
Due to the shady nature of the cryptocurrency, the CBN said it would continue to do all within its regulatory powers to educate Nigerians to desist from its use and protect Nigeria’s financial system from activities of fraudsters and speculators.
