April 18, 2024

Cryptocurrencies were previously banned in Nigeria, but despite this restriction, it appears that crypto trading activity in the country is still on the rise. In order to put a stop to it, Nigerian banks have now begun to monitor client accounts in order to identify which ones are engaged in crypto trading activities. This latest course of action comes after all commercial banks were instructed by the Central Bank of Nigeria to freeze the accounts of two individuals who were believed to be conducting crypto trading activities. An internal memo from the bank was quoted by a local publication, which urged all bank employees to monitor accounts that have high transaction volumes or those that are used for crypto trading.

The memo dictated that the Central Bank of Nigeria was closely monitoring any non-compliance with their directive of closing accounts that are involved in crypto trading for high-impact regulatory sanctions. Therefore, all staff of the banks were instructed to identify entities that are operating crypto exchanges or transacting on them to ensure they are closed in a timely manner. The memo went on to say that any employees who conceal information of accounts that are engaged in crypto trading would also be penalized. When banks monitor these accounts, they will just be in compliance with the rules set forth by the Central Bank of Nigeria. 

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Some of the accounts that the CNB has instructed to monitor include those that have massive inflows as well as outflows, along with those of fintech companies that deal in cryptocurrencies. They have also asked to monitor accounts of small businesses that have accounts that are bigger than normal and those that send and receive payments from a number of people. This action of the Central Bank of Nigeria to freeze and flag all those accounts connected to crypto trading has been criticized by crypto traders in the country. 

One Nigerian said that first E-Naira, which was the central bank digital currency introduced in Nigeria, had died upon its arrival and now the CNB was targeting young people who wanted to follow the crypto trend because they believe in it. According to a letter that was recently issued by the Central Bank of Nigeria, the accounts that were closed were found to be in direct violation of the order that the regulator had imposed back on February 5th of the year. Senator Ihenyen has also opposed the CNB’s recent action. 

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He is the head of the Stakeholders in Blockchain Technology Association of Nigeria. The senator said on Twitter that only the Nigerian legislature was the authority that had the right to impose such restrictions when it comes to cryptocurrencies. He called the action of the CNB unjust and illegal. As far as the e-Naira is concerned, analysts believe that the success of the country’s CBDC will be limited because people do not have a lot of trust in the Nigerian government. The digital currency already has a tenuous position and having to compete with fintech startups is also adding to its woes. 

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