Nigeria’s Crypto Community Suffer From CBN Directives

The crypto community in Nigeria is facing an especially difficult time as the Central Bank of Nigeria (CBN) issued a tough directive to the commercial banks to effect a policy that effectively contains crypto transactions within the country. In the past week, a lot of complaints have flooded the twitter Nigerian community where Nigerians are active. The complaints range from harassment by police officers for having crypto trading apps on their phones to being unable to access their accounts due to restrictions.

Others have complained about their accounts and transactions being tracked, getting invited to explain the source of the funds entering their accounts, and even being set up for arrest by one of the country’s financial crimes agencies. Despite the growing rate of cryptocurrency adoption in the country, the government still enforces strict regulations on the crypto community.

The CBN Order

Earlier in the year in February, the CBN had sent a directive to all commercial banks under its control to flag and restrict accounts that are used to transact cryptocurrencies. The apex bank also asked the banks to monitor the balance, outgoing, and incoming transactions on customers’ accounts and flag any account that they suspect of transacting cryptocurrency payments.

Binance and other cryptocurrency exchanges responded by suspending deposits and withdrawals via debit cards and bank accounts and Nigerian crypto traders turned to peer-to-peer exchange to trade their cryptocurrencies. Although it is less convenient and less safe than dealing with the crypto exchange directly, P2P has achieved remarkable success in Nigeria in 2021.

But a recent inside memo by one of the commercial banks shows that the CBN is enforcing its February 2021 order. The memo directed every branch and concerned staff of the bank to begin tracking the inflow and outflow from every account and flag accounts that receive or send a large sum of money repeatedly. The memo also asked the staff to flag accounts of customers aged between 18 – 34 who have a huge bank account balance or send and receive huge sums of money regularly.

The memo carried threats of disciplinary and possible legal actions against staff who do not comply with the orders. Accounts to be flagged also include those of fintech companies that perform large volumes of transactions without a payment license. Accounts that carry any crypto-related word will also be flagged and reported.

Nigerians React

The news caused a stir online as Nigerians took to Twitter to lament the government’s obsession with control and what they call the government’s “desire to see young Nigerians held in economic captivity”.

In his reaction, one of the most respected Nigerians in the crypto space, Gaius Eze, with Twitter handle — BitcoinChief (TATCOIN TRADER) (@gaiuschibueze) complained that his Nigerian bank account was blocked. He said that the government was going after young Nigerians who believe in crypto because the government’s e-Naira project was “dead on arrival”. Gaius finished by saying that once more Nigerian businesses begin accepting crypto payments, it would be over.

But a Nigerian Senator has said that the CBN was overstepping its powers by ordering that accounts used for crypto transactions be flagged. He said that only the legislature could give such orders and not the CBN.