The Circular Of The Central Bank Of Nigeria (Cbn) On Cryptocurrency: The Legality And Effect Of Same In Nigeria – Fin Tech

The Central Bank of Nigeria’s (CBN) circular has created
chaos and uncertainty within the Nigerian community especially with
those who deal in cryptocurrency in their day to day business
activities. It is pertinent to note that from this circular, the
CBN has only prohibited the dealings and/or facilitations of
payment with cryptocurrency through regulated institutions such as
financial Banks in Nigeria and same is within the regulatory powers
of the CBN as provided by the Banks and Other Financial
Institutions Act (BOFIA) and the Central Bank of
Nigeria (Establishment) Act 2007. Opinion

The legality of the CBN’s circular is questionable to the
extent that it directs financial institutions to close accounts of
persons and entities engaging in the exchange of crypto currency
without an enabling law prohibiting same. Pursuant to the CBN’s
circular, it will be illegal for any financial institution in
Nigeria to freeze/close customers’ account without a proper
order of court. Also, no person or institution, no matter how
highly placed or powerful is allowed to take laws into its hands
else it may descend into chaos. See FIDELITY BANK PLC V.
BAYUJA VENTURES LIMITED & ANOR (2011) LPELR-8873(CA)
and GOVERNOR OF LAGOS STATE V. OJUKWU (1986) All NLR
235

Therefore, the CBN as a regulatory authority to financial
institutions in Nigeria can only prohibit them from entertaining,
engaging or facilitating payments with cryptocurrency through their
system/platform. Notwithstanding the CBN’s circular,
individuals and entities should legally be able to exchange and/or
facilitate payments with cryptocurrency using a peer to peer
mechanism without the use of financial institutions in Nigeria as
cryptocurrency (regarded as form of digital asset) is basically
structured to aid peer to peer transactions. This peer to peer
transaction may be valid except the Nigerian National Assembly
passes an enabling law to make such transaction illegal.

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