No legal backing for virtual currencies, CBN warns

Central bank of Nigeria (CBN)
Central bank of Nigeria building

The Central Bank of Nigeria (CBN) on Wednesday cautioned Nigerians to be wary of investments in cryptocurrency, stressing that virtual currencies are not legal tender in Nigeria.

A statement issued by the bank on Wednesday, said cryptocurrencies such as bitcoin, ripples, monero, litecoin, dogecoin, onecoin and exchanges such as NairaEx were not licensed or regulated by the CBN.

A cryptocurrency is a digital asset designed to work as a medium of exchange that uses cryptography (the art of writing and solving codes), to secure its transactions, control the creation of additional units, and to verify the transfer of assets.

The statement, signed by the bank’s Acting Director in charge of Corporate Communications, Isaac Okorafor, emphasised that dealers and investors in any kind of cryptocurrency in Nigeria were not protected by law.

Mr. Okoroafor added that the legal implications of such arrangement is that they may be unable to seek legal redress in event of failure of the exchangers or collapse of the business.

“The CBN therefore warned Nigerians against investing in cryptocurrency as doing so would be at their own risk,” the statement said.

Earlier in January 2017, the CBN had issued a circular to banks and other financial institutions on virtual currency operations in Nigeria.

In the circular, signed by the Director, Financial Policy and Regulation Department, Kevin Amugo, the CBN noted that virtual currencies were traded in exchange platforms that are unregulated all over the world.

It further noted that transactions in virtual currencies were largely untraceable and anonymous thereby making them susceptible to abuse by criminals, in cases of money laundering and financing of terrorism.

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