The Central Bank of Nigeria (CBN) has found itself in the midst of controversy after being forced to deny reports of issuing a directive targeting cryptocurrency users. The alleged directive required all banks and financial institutions to identify individuals or entities engaging in transactions with cryptocurrency exchanges and place their accounts on Post No Debit (PND) instruction for six months.
A PND instruction restricts certain transactions on a customer’s account, prohibiting them from making debit transactions such as withdrawing funds or making payments. The confusion escalated when the central bank initially denied the report but later deleted the denial, only to claim hours later that the allegations were false.
The CBN also stated that it would crack down on individuals believed to be buying and selling Tether (USDT) on listed platforms illegally, particularly those using peer-to-peer (P2P) methods. This move comes after the central bank lifted a ban on banks facilitating transactions for crypto exchanges in December 2023, nearly two years after imposing a comprehensive ban on banks engaging with digital currencies.
The decision to lift the ban was attributed to the increasing global demand and adoption of cryptocurrencies, which made it unjustifiable to maintain stringent restrictions on financial institutions. However, with the swift devaluation of the naira and an inflation rate of 29.9%, the government shifted its focus to platforms offering cryptocurrency services, disabling websites associated with crypto trading.
Binance, a prominent cryptocurrency exchange, faced scrutiny from the CBN over “suspicious financial transactions” in 2023, with $26 billion passing through Nigeria via Binance from unidentified sources and users. The executive of Binance, Tigran Gambaryan, based in the United States, was detained in Nigeria and is facing charges related to money laundering following a meeting with Nigerian officials on regulatory compliance.
Another executive, Nadeem Anjarwalla, who met with Nigerian officials regarding Binance’s regulatory issues, escaped custody and was tracked down in Kenya, where he faces extradition. The unfolding events have raised concerns about the regulatory landscape for cryptocurrency exchanges in Nigeria and the challenges they face in complying with government regulations.