The Central Bank of Nigeria (CBN) stated that the African country was not endorsing cryptocurrencies. In fact, the CBN Governor, Godwin Emefiele called the industry and its operators “embedded in a high level of illegality” and decided to shut out cryptocurrency entities from the banking system, stating that Nigeria’s banking space has no room for crypto.

Since they consider crypto assets a threat to their countries’ economy, central banks around the world have been questioning the need for such investments. India’s central bank agreed with this point of view and remains cautious even though the Prime Minister, Narendra Modi, noted a progressive regulation regarding cryptocurrency. 

On 3 November, Nigeria’s Central Bank had issued a Post-No-Debit circular ordering banks to close the accounts of named bank customers and place their funds in suspense accounts for engaging in cryptocurrency trading, in contravention of a CBN Circular from 5 February 2021.

However, the circular from 5 February did not place any new ban on cryptocurrencies. It just reiterated the contents of a circular released in 2017, which told banks not to deal in cryptocurrency and also to make sure that existing customers who were virtual currency exchangers had effective AML/CFT controls that enabled them to comply with KYC standards and transaction monitoring requirements.

Shortly after the launch of e-Naira, making Nigeria the first African country to introduce a digital currency, the central bank had begun controlling crypto users. But the memo issued almost two weeks ago instructed banks to identify accounts suspicious of using crypto, including foreign exchange dealers. The idea was to flag bank accounts of 18-to-30-year-old customers with high volume transactions for closure. This strategy seems to be designed to prevent Nigerians from owning cryptocurrency, but without expressly stating it. In 2020, Nigeria ranked third on the planet in terms of highest bitcoin trading volume and cryptocurrency transactions saw a yearly increase of 25% in June, 2021.