Nigerian Central Bank Sanctions Banks For Enabling Crypto Transfers

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The sanc­tions are a part of CBN’s efforts to dis­cour­age cryp­tocur­ren­cy usage and to firm­ly estab­lish com­mer­cial restric­tions on cryp­tocur­ren­cy trading.

The Cen­tral Bank of Nige­ria (CBN) has penal­ized three com­mer­cial banks in the coun­try for fail­ing to fol­low a direc­tive from the reg­u­la­tion that pro­hibits con­sumers from trans­act­ing in cryptocurrencies.

CBN’s Sanctions

Accord­ing to the lat­est Bloomberg report, the finan­cial insti­tu­tions were fined for breach­ing a cryp­tocur­ren­cy trad­ing restric­tion levied a year ago. CBN fined Stan­bic IBTC Bank, which hap­pens to be the domes­tic unit of Stan­dard Bank Group Ltd., for 500 mil­lion naira for two accounts alleged to have been used for cryp­to transactions.

The fil­ing with Niger­ian Exchange Ltd alleged that the country’s biggest lender Access Bank Plc was imposed a penal­ty of 100 mil­lion naira for fail­ure to ter­mi­nate user cryp­to accounts. Unit­ed Bank for Africa (UBA) incurred a 100 mil­lion naira penal­ty for dig­i­tal-cur­ren­cy trans­ac­tions by a cus­tomer. Fideli­ty Bank Plc, the full-fledged com­mer­cial bank, on the oth­er hand, was fined 14.3 mil­lion naira.

Chief Exec­u­tive Offi­cer Wole Adeniyi revealed that Stan­bic IBTC fol­lowed the cen­tral bank reg­u­la­tion, how­ev­er, the sanc­tioned trans­ac­tions may have passed through its sys­tem unde­tect­ed. Adeniyi also said that the cen­tral bank was able to iden­ti­fy the rel­e­vant trans­ac­tions due to “advanced capa­bil­i­ty” that even the lenders in the coun­try do not have access to. The plat­form has urged the cen­tral bank to share the tech­nol­o­gy. The exec speculated:

“It doesn’t seem that they are going to enter­tain a refund, but they are now shar­ing intel­li­gence with us to be able to kind of deter clients.”

Crypto Climate in Nigeria

Nige­ria is not par­tic­u­lar­ly a cryp­to-friend­ly nation. But the West African coun­try is home to the largest vol­ume of cryp­tocur­ren­cy trans­ac­tions out­side the Unit­ed States. The continent’s most pop­u­lous coun­try also accounts for the largest pro­por­tion of retail users exe­cut­ing trans­ac­tions under $10,000, accord­ing to the blockchain intel­li­gence plat­form, Chainalysis.

Last Feb­ru­ary, CBN had released an order to close the accounts of hold­ers involved in trans­act­ing in or oper­at­ing cryp­tocur­ren­cy exchanges. The apex bank had sent the cir­cu­lar to the domes­tic finan­cial estab­lish­ments and warned of severe reg­u­la­to­ry sanc­tions if they fail to comply.

Eight months after the ban, Nigeria’s finan­cial reg­u­la­tor – Secu­ri­ties and Exchange Com­mis­sion – had announced set­ting up a research unit as part of its effort to reg­u­late the industry.

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