The Central Bank of Nigeria has placed a ban on all regulated financial institutions from providing services to crypto exchanges in the country.
The prohibition was contained in a circular issued by the CBN on Friday. According to the central bank’s notice, the ruling is an extension of earlier warnings from the bank about the risks associated with virtual currencies.
As part of the ban, the CBN has directed all commercial banks to close accounts belonging to crypto exchanges as well as other businesses transacting in cryptocurrencies in the country.
The CBN also warned of stiff penalties to any bank or financial institution that fails to comply with the directive.
Nigeria’s central bank did not respond immediately to Cointelegraph’s request for comments on the issue. However, in a previous piece of correspondence, Osita Nwanisobi, acting director of the CBN’s communications department told Cointelegraph that commercial banks had previously been warned not to participate in the crypto market.
While cryptos have been popular in Nigeria, virtual currencies came into national consciousness amid the protests against police brutality in October 2020. At the time, the central bank ordered the suspension of bank accounts belonging to supporters of the ENDSARS movement prompting a switch to Bitcoin (BTC) and crypto donations.
As previously reported by Cointelegraph, Bitcoin adoption in Nigeria continues to increase. According to data from Google Trends, Nigeria is still number one in the world in terms of search interest for Bitcoin.
The CBN’s ban is also reminiscent of the actions taken by its Indian counterpart, the Reserve Bank of India, back in 2018. Two years later, India’s Supreme Court reversed the order.
Apart from the CBN ban, the only other crypto-related regulatory news to come out of Nigeria was back in September 2020. At the time, the Nigerian Securities and Exchange Commission recognized crypto as securities with plans to formulate a concrete legal framework for digital assets.