Implications Of The CBN Circular on Virtual Currencies (VC) Operations In Nigeria
The Central Bank of Nigeria (CBN) yesterday released a circular concerning Virtual Currency (VC) operations in Nigeria. While the apex bank, did not come out categorically to ban VC operations in the country, the tone of the circular suggests that it will keep a close eye on their operations/ possibly begin to regulate them in the nearest future. The CBN should be commended for warning consumers of the unregulated nature of bitcoin operations. The circular has certain contradictory sections, however.
The CBN instructed bank and other financial institutions not to hold/use/transact/trade in virtual currencies. Yet in the same circular warns that banks that transact in such business do so at their own risk. This ambiguity seems to be the hallmark of the current CBN leadership. Leading to a conundrum regarding the FX markets. One that has yet to be solved.
Financial institutions in the country tend to over-steer on the side of caution. Expect some banks to outrightly decline or shut down bank accounts of bit coin exchange operators in the country. There will be stringent monitoring of bank accounts operated by bitcoin exchanges in the country. There is also the very likelihood that the CBN will impose charges/levies on Virtual Currency Operators in the country. Adding a barrier to financial innovation, desperately needed in the country.
[These developments will lead to difficulties in trading virtual currencies in the country. It may also lead to an increase in their operations as some banks and other financial institutions test the boundary set by the CBN. Time will tell if the CBN has opened the stable gates or killed a potential golden goose. Attached is a copy of the circular.