- SiBAN says CBN’s crytocurrency policy retrogressive
- Plans dialogue with apex bank
Cryptocurrency Traders have warned financial institutions in the country to desist from freezing the funds in the accounts of their customers for dealing in cryptocurrency.
The traders, through the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN), stated that the Central Bank of Nigeria’s directive to the financial institutions on cryptocurrency trading should not be used as an excuse to clamp down on customers funds.
SiBAN is a self-regulatory group in Nigeria’s blockchain and cryptocurrency ecosystem that fosters consumer protection and investor confidence.
The President, SiBAN, Senator Ihenyen, who spoke with Biz Watch Nigeria on Sunday stated that banks caught doing this would face litigation.
He said, “The CBN letter must not and cannot be an excuse for anyone to freeze any of their customers’ accounts. Closure of accounts, as advised by the CBN, should be interpreted to mean that affected customers must have been given an opportunity to access their funds before final closure. Anything less may expose banks and other financial institutions to avoidable litigation.”
The CBN in a circular on Friday directed Deposit Money Banks, non-Bank Financial Institutions (NBFIs), other financial institutions to close accounts trading in cryptocurrency or face severe regulatory sanctions.
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This directive has, however, been met with criticism from Nigerians all over the country.
Idenyen said all organisations and individuals involved cryptocurrency trading and cryptocurrency exchange had been advised to work with the financial institutions hitherto facilitating their crypto-related transactions to ensure the safety of all customers’ funds.
He also cautioned traders, cryptocurrency exchange, or financial services provider who might attempt to take undue advantage of the CBN ban to perpetrate illegal acts.
While, appreciating the CBN’s role as the statutory body responsible for ensuring a sound financial system in Nigeria, Idenyen said its latest policy on cryptocurrency transactions was not the right policy direction for Nigeria.
He said despite the apex’s bank policy on cryptocurrency rdating in 2017, the volume of crypto trading in the country as well as the local and foreign private investments in the virtual assets have grown.
“The Nigeria crypto market has been number one in Africa and only second to the United States. Against this background of a burgeoning industry in the digital economy, the CBN policy amounts to wielding the hammer in an industry it should be leveraging to improve efficiency in the financial services industry and competitiveness across key sectors of the Nigerian economy,” he said.
“The world has moved past the point the CBN letter is reversing Nigeria to. Even by Nigerian standards, considering the Securities Exchange Commission’s recognition of cryptoassets such as bitcoin for example as commodities or securities in September 2020, the CBN is behind developments in crypto and virtual assets generally.
“In relatively progressive jurisdictions, the considered approach is to regulate cryptocurrency services and transactions, requiring KYC/AML compliance or some measure of formal registration. In the UK, the Financial Conduct Authority (FCA), rather than ban cryptocurrencies, introduced a temporary registration regime for cryptocurrency exchanges.
“In South Africa, virtual asset service providers, including cryptocurrency exchanges, are required to comply with KYC/AML regulations.
“Banning banks and other financial institutions from servicing persons and entities involved in cryptocurrency trading and exchange business is not regulation.
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“If banning was ever the best answer to threats and risks provided by disruptive innovations, I believe the National Assembly is better positioned to legislate on such.
“The CBN’s job as a financial services regulator, especially considering that the crypto industry is still nascent, is to introduce risk-management measures, helping Nigeria intelligently maximise the opportunities while also minimizing the risks,” SiBAN president added.
Speaking on the impact of crypto trading on dollar scarcity, Idenyen stated that he was aware of the impact of cryptocurrency trading on cross-border remittances because digital assets were regarded as a faster and cheaper means of remittances.
He said without a sound financial system and economic stability, people would continue to explore fiat currencies due to their stability.
He advised the CBN and policymakers to focus on the fundamentals rather than chasing the shadows or fighting the symptoms.
