Nigerian Central Bank prohibits banks from providing services to crypto exchanges

Nigeria's central bank has banned commercial banks from providing account services to crypto exchanges.

CBN has banned all financial regulatory establishment from providing services to cryptocurrency exchanges in the country.

The ban was contained in a circular issued by CBN on Friday. According to the central bank's notice, the ruling is an extension of the bank's previous warnings about the risks associated with digital currencies.

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As part of the ban, the CBN has ordered all commercial banks to close accounts belonging to cryptocurrency exchanges and other companies that conduct cryptocurrency transactions in the country.

The CBN also warned of severe penalties for any bank or financial institution that does not comply with the directive.

Nigeria's central bank did not immediately respond to phguru's request for comment on the matter.

However, in an earlier correspondence, Osita Nwanisobi, acting director of CBN's communications department, said that commercial banks had previously been warned not to participate in the crypto market.

While crypto have been popular in Nigeria, digital currencies reached the national consciousness amid protests against police brutality in October 2020.

The central bank gave the suspension of bank accounts belonging to supporters of the EndSARS movement, prompting a switch to Bitcoin (BTC) and crypto donations.

The adoption of Bitcoin in Nigeria continues to increase. According to Google Trends data, Nigeria remains number one in the world in terms of search interest for Bitcoin.

The CBN ban also recalls the actions taken by its Indian counterpart, the Reserve Bank of India, in 2018. Two years later, the Supreme Court of India reversed the order.

Apart from the CBN ban, the only other cryptocurrency-related regulatory news to come out of Nigeria was in September 2020.

The Nigerian Securities and Exchange Commission recognized cryptocurrencies as securities with plans to formulate a concrete legal framework for digital assets.