Mr Emefiele made the declaration on Tuesday, February 23,
2021, while briefing a joint Senate Committee on Banking, Insurance and Other
Financial Institutions; ICT and Cybercrime; and Capital Market, on its
directive to institutions under its regulation.
Describing the operations of cryptocurrencies as dangerous
and opaque, the CBN Governor said the use of cryptocurrency contravened an
existing law. He said given the fact
that cryptocurrencies were issued by unregulated and unlicensed entities made
it contrary to the mandate of the Bank, as enshrined in the CBN Act (2007)
declaring the Bank as the issuer of legal tender in Nigeria.
Emefiele, who also differentiated between digital
currencies, which Central Banks can issue and cryptocurrencies issued by unknown
and unregulated entities, stressed that the anonymity, obscurity, and
concealment of cryptocurrencies made it suitable for those who indulge in
illegal activities such as money laundering, terrorism financing, purchase of
small arms and light weapons and tax evasion.
Citing instances of investigated criminal activities that
had been linked to cryptocurrencies, he stated that the legitimacy of money and
the safety of Nigeria’s financial system was central to the mandate of the CBN,
even as he declared that “Cryptocurrency is not legitimate money” because it is
not created or backed by any Central Bank.
“Cryptocurrency has no place in our monetary system at this
time and cryptocurrency transactions should not be carried out through the
Nigerian banking system,” he added.
Mr Emefiele also emphasized that the Bank’s actions were not
in any way, shape or form inimical to the development of FinTech or a
technology-driven payment system. On the contrary, he noted that the Nigerian
payment system had evolved significantly over the past decade, surpassing those
of many of its counterparts in emerging, frontier and advanced economies
boosted by reforms driven by the CBN.
While urging that the issue of cryptocurrency be treated
with caution, the CBN Governor assured that the Bank would continue its
surveillance and deeper understanding of the digital space, stressing that the
ultimate goal of the CBN was to do all within its regulatory powers to educate
Nigerians on emerging financial risks and protect our financial system from the
activities of currency speculators, money launderers, and international
fraudsters.
Also speaking, the Director-General of the Securities and
Exchange Commission (SEC), Mr Lamido Yuguda clarified that there was no policy
contradiction between the CBN directive and the pronouncements made by the SEC
on the subject of cryptocurrencies in Nigeria. He explained that the SEC made
its pronouncement at the time to provide regulatory certainty within the
digital asset space due to the growing volume of reported flaws.
Prior to the CBN directive, he said the SEC had, in 2017,
cautioned the public on the risks involved in investing in digital and
cryptocurrency, adding that the CBN, Nigeria Deposit Insurance Corporation
(NDIC) and the SEC between 2018 and 2020 had also issued warnings on the lack
of protection in investments in cryptocurrency.
Yuguda further disclosed that following the CBN directive,
the SEC had put on hold the admittance of all persons affected by CBN circular
into its proposed regulatory incubatory framework in order to ensure that only
operators that are in full compliance with extant laws and regulations are
admitted into the framework for regulating digital assets.
Similarly, the Chairman of the Independent Corrupt Practices
and Other Related Offences Commission (ICPC), Professor Bolaji Owasanoye
highlighted the risks inherent in investing in virtual assets and
cryptocurrencies in Nigeria.
He explained that cryptocurrencies posed serious legal and
law enforcement risks for Nigeria due to its opaque nature and illicit
financial flows, adding that the current move by the Federal Government to link
National Identification Numbers with SIM cards attested to the fact that
terrorists, kidnappers, bandits, and perpetrators in illegal acts had relied on
the shield provided by anonymity to commit heinous crimes.
Earlier in his welcome remarks, the Chairman of the Joint
Senate Committee, and Chairman, Senate Committee on Banking, Insurance and
Other Financial Institutions, Senator Uba Sani, said the committee was on a
fact-finding mission and had no preemptive recommendation or stand and would
make its position known only after it had reviewed the submissions made by
stakeholders.
0 comments:
Post a Comment