Reports of the Central Bank of Nigeria imposing discontinuation of services rendered to bitcoin clients travelled fast. The Central Bank decided to terminate all crypto trading activities within the region, banning crypto enthusiasts from buying or selling any cryptocurrencies and all the related accounts were closed.

The banning directive

The directive read in part that, “adding to the previous regulatory commands on this matter, the Central Bank issues a reminder to all regulated financial institutions that from now henceforth, dealing with or in crypto and facilitating related transactions is against the law.”

The news came out as a memo released and distributed by the Central Bank of Nigeria, making the intention of this top of the food chain bank to eliminate bitcoin trading very clear. The disseminated memo was signed by Kevin Amugo, the 2017 Director of Finance and Policy Regulation in Nigeria. With this official stamp, it became law that the use of any virtual currencies that were not regulated within the state of Nigeria was illegal. The role played by virtual currencies in enabling money laundering, and funding of terrorist activities was evident.

With this directive, it became clear that they were only following up and reinforcing a previous warning by the Banking Supervision Department. The only difference was that with the latest warning, Nigeria's Central Bank expected that every Deposit Money Bank and Non-Bank Financial Institutions, including DMB, NBFI, and OFI would close all the accounts held by individuals or organizations that engaged in crypto transactions with immediate effect. Failure to follow this directive would see the service provider being sanctioned by law.

Effect of the restriction on Nigeria’s booming crypto industry

The Nigerian crypto economy was on a forward momentum at this point. The regulatory directive only served to slow down what would otherwise have been a significant enabler for the country's economy. Reducing the pace of a fast-growing fintech region, the entire crypto community that resides within Nigeria was negatively affected by this development.

It became worse when the Nigerian Crypto Community opened their eyes to the fact that this directive was a violation of the promise given by their Securities and Exchange Commission (SEC) which had committed to regulating crypto in such a way that technology would be free from any obstructions and innovation allowed to thrive. The commission had also committed to creating standards intended to motivate morally upright activities in the crypto space with the sole intention to make the entire crypto ecosystem an effective and fair market for the entire Nigerian population.