CBN: Top Bankers Hit Emefiele’s Cryptocurrency Ban

By Fola James

Senator Tokunbo Abiru, a former Managing director of Polaris Bank has joined top bankers and financial experts, in the country to flay the ban on cryptocurrency transaction in the country by the Central Bank of Nigeria, CBN. Last week, the Godwin Emefiele-led apex bank directed commercial banks and other financial institutions to close accounts of cryptocurrency traders, citing insecurity and governance issues.

While speaking at the Nigerian Senate on the issue on Thursday, the former banker said the CBN should be careful the way the issue is being handled, because the action is capable of sending many Nigerians into the job market. Abiru’s comment came on the crest of similar position by Kingsley Moghalu, a former Deputy Governor of the CBN. Moghalu, a former presidential aspirant had said that the issue of national security was not enough to ban digital currency trade.

Abiru, who spoke against the backdrop of Senate summons of the CBN and Security and Exchange Commission, SEC to address it next week on the issue, said it would be economically suicidal for CBN to take away the livelihood of many Nigerians.

He explained that cryptocurrency is a global innovation, noting that “the attraction is better underscored by the typical loss of value in the legal tender. Overtime, due to inflationary pressures, currencies lose values and particularly in the period that is further challenged by recession.”

According to Abiru, the benefits of digital currency cannot be overemphasized because “in Nigeria in the last few years , we have had an increase in cryptocurrency investment to the tune of $500 million. Last year alone there was over $140 million investment in cryptocurrency,” he said.

Moghalu had compared the action with killing a fly with a sledge hammer, after the apex bank said it was trying to protect the country from terrorists and fraudsters, who hide under digital currency to launder money for nefarious activities.

“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,” the CBN said in a statement.

The former CBN governor said the apex bank did not take the best approach on the issue, adding that what should have been done, is to prevent commercial banks from engaging in cryptocurrency rather than an outright ban on trading activities.

He said “It is mainly targeted at cryptocurrency exchanges. Hence, it does not criminalise individuals trading in cryptocurrencies. Individuals would likely have difficulties in making transactions since the activities of the exchanges are limited.

“The CBN has said it is not a legal tender but they don’t have to tell you or me what we can exchange for value. If I want to give you my shirt and you give me your shoe the Central Bank has no business with it.”

The CBN last Friday issued a directive to deposit money banks, DMBs, non-financial banks, and other financial institutions not to provide banking services to entities dealing with cryptocurrencies including exchanges.

The Emefiele-led bank further issued a statement on Sunday that it was only following its directive earlier issued in 2017, adding that its action on the issue was not new.

At least no fewer than $500 million worth of cryptocurrencys transactions have been carried out in the last four years by Nigerian traders, according to some reports. In spite of this, the government regulator said it feared the total collapse of the nation’s financial sector if the digital currency trade is allowed to country. Only a few will not contest such argument.