The Central Bank of Nigeria (CBN) has justified the ban on cryptocurrencies, saying it fuels illicit financial flow and terrorism.
In a statement, Osita Nwanisobi, Acting Director, Corporate Communications, CBN, said the ban on cryptocurrencies would not have any negative impact on Fintechs as there are other robust platforms they can thrive.
He said because cryptocurrencies are issued by unregulated and unlicensed entities, their use in Nigeria goes against the CBN's critical mandates.
"The use of cryptocurrencies in Nigeria is a direct contravention of existing law. It is also important to highlight a critical difference between a Central Bank issued Digital Currencies and cryptocurrencies. As the names imply, while Central Banks can issue Digital Currencies, cryptocurrencies are issued by unknown and unregulated entities," Nwanisobi explained.
"The question that one may need to ask therefore is, why any entity would disguise its transactions if they were legal. Based on this opacity, cryptocurrencies have become well-suited for conducting many illegal activities, including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.
"Many banks and investors who place a high value on reputation have been turned off from cryptocurrencies because of the damaging effects of the widespread use of cryptocurrencies for illegal activities.
"The role of cryptocurrencies in the purchase of hard and illegal drugs on the darknet website called "Silk Road" is well known. Recent reports have also revealed that cryptocurrencies have been used to finance terror plots, further damaging its image as a legitimate means of exchange.
"More also, repeated and recent evidence now suggests that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment, thus explaining the significant volatility and variability in their prices."