The Central Bank of Nigeria (CBN) has again cautioned Nigerians, particularly investors to desist from transacting in Cryptocurrencies, following the restrictions placed by several countries on financial institutions facilitating the use of such currencies for transaction.
The apex bank reactiing to condemnations trailing its directive to Deposit Money Banks (DMBs) to desist from transacting in Cryptocurrencies, explained that the restrictions were not new but only reinforcing its earlier position in the previous circular to banks in the country .
CBN's Acting Director, Corporate Communications, Sunday, Osita Nwanisobi, in a statement on Sunday, clarified that the CBN circular of February 5, 2021 did not place any new restrictions on cryptocurrencies.
According to him, all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies.
He added that the CBN’s position on cryptocurrencies is not an outlier as many countries, central banks, international financial institutions, and distinguished investors and economists have also warned against its use.
Nwanisobi listed countries who had placed certain level of restrictions on financial institutions facilitating cryptocurrency transactions, to include China, Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia .
CBN added that Cryptocurrencies are are completely banned and all exchanges closed as well in China .
Nwanisobi also justified the directive with reference to famed investor Warren Buffett who described cryptocurrencies as “rat poison squared,” a “mirage,” and a “gambling device.”
According to him,“Mr. Buffett believes it is a “gambling device” given that they are mostly valuable because the person buying it does so, not as a means of payment; but in the hope they can sell it for even more than what they paid at some point.
During an online forum hosted by the Davos-based World Economic Forum few weeks ago, Andrew Bailey, the Governor of the Bank of England, highlighted the extreme price volatility of cryptocurrencies as one of the biggest flaws and explained that this flaw makes it impossible for them to be used as a lasting means of payment.
“It is not surprising he would take that position because, Bitcoin, the best-known cryptocurrency, hit a record high of $42,000 per unit on January 8, 2021, and sank as low as $28,800 about two weeks later. This is far greater volatility than is found with normal currencies.”
Nwanisobi stressed that Cryptocurrencies are issued by unregulated and unlicensed entities which violated the key mandate of CBN , as enshrined in the CBN Act (2007), as the issuer of legal tender in Nigeria, saying the use of cryptocurrencies in Nigeria is a direct contravention of existing law.
He asked investors to be mindful of the facts that a Central Bank issued Digital Currency while cryptocurrencies,while cryptocurrencies are issued by unknown and unregulated entities.
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