Financial experts laud CBN’s ban on cryptocurrency

Some financial experts on Wednesday in Ibadan, Oyo State, lauded the ban placed on Cryptocurrencies in Nigeria by the Central Bank of Nigeria (CBN).

They told our correspondent that the move was necessary considering nefarious activities that could be carried out under the guise of secrecy that shrouds cryptocurrencies.

Mr Tunji Adepeju, a Financial Consultant said the ban on cryptocurrencies by CBN should not come as a surprise because the bank first placed the ban in January, 2017 and did it again through a circular on Feb. 5.

“The latest circular just capped it up because the CBN had found out that some people were still trading in it and some banks were involved.

“The CBN acts of 2007 stated that the bank is the one in charge of monetary matters in Nigeria.

“Cryptocurrencies are not a monetary asset so the mandate of CBN does not cover its operation.

“Even in accounting, cryptocurrencies are regarded as an intangible asset, something you cannot see or touch. So to value it, there are some ways in the accounting profession in which the international accounting standard says it should be valued.

“In as much as it is an intangible asset, there is no basis for CBN to recognize it. The ban is just to restate the facts that it is forbidden in Nigeria,” he said.

Adepeju explained that CBN did not recognize it as a monetary asset, the securities exchange commission recognized it and it allowed companies to have it in their possession and record it in their books.

He said on the effect of cryptocurrencies on the economy, some people claimed that 200 to 300 millions come into it through cryptocurrencies.

Adepeju further said, “but the unfortunate thing is that we don’t know the owners, where the cryptocurrencies are coming from and how they are traded in because everything concerning cryptocurrencies is done in secrecy and it is anonymous.

“You don’t know who is the owner of what. So transactions in cryptocurrencies are not documented as it is being done in commercial banks.

“So it is difficult to say it has positive effects on the Nigerian economy.

“But its likely negative effects according to CBN that it encourages money laundering and such money may be used to finance terrorism, banditry and drugs.

“So it is good that CBN has come again openly to ban it.”

The financial expert said the effect may have on some banks who are trading in it could be devastating on depositors and shareholders if cryptocurrencies crashed due to fraudulent actions of those involved.

“The effect could be similar to the problem banks had some four years ago when the oil and gas sector had problems and a lot of banks in Nigeria had issues because they invested a lot in oil and gas.

“So if cryptocurrencies are allowed because banks will always look for where profit will come in fast and heavy, if they took money from you and invest it into cryptocurrencies and there is a bubble which burst then all the depositors and shareholders of the bank will suffer for it.

“As a nation we cannot accommodate that kind of negative impact, we have had enough problems and we should not add that to it,” Adepeju said.

Also, Mr Sola Famakinwa, a Financial Expert said the CBN had done well to reel out the evil that accompanied cryptocurrencies trading in Nigeria.

He said on Feb. 5, 2021, the CBN placed a ban on financial institutions facilitating cryptocurrencies transactions in Nigeria.

“Cryptocurrencies are issued by unregulated and unlicensed companies. This makes it illegal business, they are not licensed by CBN.

“Also, Cryptocurrencies are speculative, anonymous and untraceable and so there is a high risk in transacting in cryptocurrency which could lead to loss of investment.

“Moreover, it can be used for money laundering, terrorism financing, illicit fund flow, tax evasion and purchase of arms and weapons illegally,” Famakinwa said.