Nigeria’s central bank orders commercial banks to close accounts of crypto users

On 5 February 2021, Nigerian central bank mandated that all banks must close users’ accounts that are connected to cryptocurrency transactions.

The authority also reminded banking entities that dealing in cryptocurrencies or facilitating payments for crypto exchanges “is prohibited.”

Moreover, such banking institutions must “identify persons and/or entities” dealing with cryptocurrency transactions or even operating digital currency exchanges. The Central Bank of Nigeria also stressed on ensuring that “such accounts are closed immediately.”

The central bank’s banking supervision department issued the notice in a letter addressed to the regulated financial institutions. In the letter, the banking authority cited an earlier circular dating back to January 2017 that cautioned banks and members of the public about the risks associated with cryptocurrencies. 

Source: CBN

The reason for this decision was not mentioned in the letter. However, the notice concluded in a warning that entities going against this ruling would face “severe regulatory sanctions.”

The Nigerian Securities and Exchange Commission, last September, had defined crypto as securities and even planned to introduce a legal framework for the assets.

A month later in October 2020, cryptocurrency adoption received a boost in adoption amid protests against police brutality. At the time, authorities called for the suspension of bank accounts of supporters who took part in the EndSARS movement. This resulted in people turning to Bitcoin and crypto donations.

Nigeria is the eighth largest region in terms of crypto adoption according to Chainalysis data. Moreover, Google Trends suggested that Nigeria ranks first when it comes to search interest in Bitcoin.