IS CRYPTOCURRENCY LEGAL IN NIGERIA
Since cryptocurrencies are not recognised by the Central Bank of Nigeria (CBN), which regulates Nigeria's financial market, there is no regulatory framework or licencing system in place for cryptocurrency operators.
IS CRYPTOCURRENCY LEGAL IN NIGERIA
Since cryptocurrencies are not recognised by the Central Bank of Nigeria (CBN), which regulates Nigeria's financial market, there is no regulatory framework or licencing system in place for cryptocurrency operators. In a January 2017 circular to banks and other financial institutions about the use of cryptocurrencies or virtual currencies in Nigeria, the Central Bank of Nigeria (CBN) stated that cryptocurrencies are largely anonymous and untraceable, making them open to abuse by criminals, particularly in money laundering and the financing of terrorism.
In a letter written to banks and other financial institutions in February 2021, the Central Bank of Nigeria (CBN) has declared that cryptocurrency trading and providing payment services for cryptocurrency exchanges are prohibited. All banks and other financial institutions were also instructed by the CBN to identify and shut the accounts of people or companies who deal in cryptocurrencies or operate cryptocurrency exchanges.
The CBN asserted that because cryptocurrencies are not legal tender and are produced by unregistered and unregulated businesses, it is illegal to use them in Nigeria. CBN acknowledged the issue of cryptocurrency anonymity. It said that cryptocurrency was open to illegal uses like money laundering and terrorism funding due to its anonymity and lack of KYC. Another justification was the alleged threat posed by cryptocurrencies to the stability of other nations' banking systems.
The Securities and Exchange Commission (SEC), the principal oversight authority for the Nigerian capital market, released a statement on Digital Assets, their classification, and treatment, with a focus on cryptocurrency regulation in Nigeria. According to the Commission, it will oversee innovation in the cryptocurrency sector in three ways: safety, market expansion, and offering answers to problems that will guide its policies, strategy, and contacts with innovators looking for legitimacy and relevance in this expanding business.
The regulations' objective, according to a statement from the Commission, is to establish standards that promote ethical behaviour rather than to obstruct technology or innovation. In a prior statement, the SEC cautioned investors, stakeholders, and capital market participants to exercise caution when dealing with phoney, unregistered investment schemes and capital market operators, particularly those who make unjustified return claims and false investment claims.
Although there is a tremendous desire to do so quickly, Nigeria has not yet established a legal framework or legislation for cryptocurrencies or crypto exchanges. Nigerian MPs have urged the regulatory bodies to move quickly to create a legal framework for cryptocurrencies in the nation in response to the CBN and SEC's initiatives.
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