Nigerian Fintechs Limit Crypto, Users Face Account Blocks

The Central Bank of Nigeria has taken a mixed stance on cryptocurrency, with recent actions contradicting its 2021 decision to allow crypto account openings.

May 3, 2024 - 13:11
May 3, 2024 - 10:36
Nigerian Fintechs Limit Crypto, Users Face Account Blocks
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The Central Bank of Nigeria (CBN) has shown mixed views on cryptocurrency in recent years, with its current actions conflicting with its 2021 decision to enable crypto account openings.

Nigerian fintech companies, including Moniepoint, PalmPay, and Paga, have cautioned their users against linking their platforms to crypto transactions. They warned of severe penalties as the country strives to regulate cryptocurrency. These fintech firms informed customers that their accounts would be frozen if they engaged in crypto transactions. This comes after the CBN instructed some banks, including Moniepoint, to stop onboarding new customers.

In a notice to customers on May 2, 2024, Moniepoint stated:

"In line with CBN regulation, we will close the account of anyone engaging in crypto or other virtual assets transactions and share their details with relevant authorities."

This announcement reverses the CBN's earlier decision to lift the crypto ban imposed in 2021. In a circular from December 2023, the CBN instructed financial institutions to facilitate account opening, provide settlement services, and act as intermediaries for businesses involved in crypto transactions.

The December circular also overruled previous ones from 2017 and 2021, which had restricted banks and other financial institutions from serving cryptocurrency providers. An X user who is also a PalmPay customer reported that his account was frozen. He stated it would only be unblocked if he agreed to a contract requiring him to refrain from crypto transactions.

Paga also notified customers via email, emphasizing its compliance with all CBN regulations due to its licensing by the CBN.

"Pursuant to the CBN circular with reference FPR/DIR/GEN/CIR/06/10, we wish to remind you that dealing in or facilitating transactions in cryptocurrency and other virtual currencies is not permitted."

The referenced circular, dating back to 2017, warned banks and other financial institutions about their interactions with crypto exchanges and customers who deal in cryptocurrency. Previously, the CBN denied reports of issuing a directive that instructed banks and financial institutions to identify individuals or entities engaged in transactions with crypto exchanges and to restrict certain transactions on customer accounts for six months. The disputed circular also stated that financial institutions involved in crypto or facilitating payments for crypto exchanges were forbidden.