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Nigeria orders banks to crack down on cryptocurrencies

·2-min read

Nigeria's central bank on Friday ordered banks and financial institutions to close down accounts involved in the transfer or exchange of cryptocurrencies, warning of sanctions it they did not comply.

Africa's largest economy has become a huge market for cryptocurrency trade, but the central bank has warned for several years that the currencies are not regulated or legal tender in Nigeria.

Cryptocurrencies are seen by some Nigerians as a safe haven in a petroleum-reliant economy battered by swings in oil prices damaging shutdowns last year to curb the coronavirus pandemic.

"The bank hereby wishes to remind regulated financial institutions that dealing with cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited," it said in a statement posted on its website.

It said all banks and financial institutions were directed to identify persons and/or entities involved in cryptocurrency exchanges and close their accounts immediately.

"Breaches of this directive will attract severe regulatory sanctions," it said.

A spokesman at the bank did not respond to calls seeking more details on the decision.

WATCH: What are the risks of investing in cryptocurrency?

Digital currencies are popular in Nigeria, where they are seen as ways of easing business in a country known for corruption, currency fluctuations and often sidelined in the past by the global financial system.

Africa's most populous country is also home to a thriving start-up tech sector which often uses cryptocurrencies.

During #EndSARS protests in October against police brutality, activists turned to social media to call for donations though digital currencies to help support the demonstrations.

Twitter Founder Jack Dorsey even supported the call for bitcoin donations for the Nigerian rallies.

Weeks of protests by thousands of young people shocked the country and forced the government to disband the Special Anti-Robbery Squad or SARS police unit at the heart of the demonstrations.

The protests swelled into an expression of long-standing frustrations over bad governance, with a prolific social media campaign winning support from high-profile celebrities.

But the demonstrations ended weeks later when security forces shot at demonstrators in Lagos -- killing at least 12 people, according to Amnesty International. The army denied using live rounds.

Friday's warning to banks was the latest missive from the central bank on cryptocurrencies.

The central bank has warned since 2017 that digital currencies are not authorised, and that traders and investors in them were at risk as they were not protected by law.

WATCH: What is bitcoin?

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