IMF backs CBN ban on cryptocurrency in Nigeria

The International Monetary Fund (IMF) has thrown its weight behind the Central Bank of Nigeria (CBN) two weeks after the CBN directed banks to close accounts related to cryptocurrency across Nigeria.

The CBN had also warned deposit money banks and other financial institutions against dealing with cryptocurrency exchanges, starting that the digital asset isn’t a legal tender in Nigeria.

According to the IMF, the caution shown by Nigeria’s monetary authority is warranted due to the risk in cryptocurrency. The IMF made its reservation known in the 2020 Article IV IMF Staff Report for Nigeria.

In the report, the Resident Representative of IMF for Nigeria, Ari Aisen, said the use of cryptocurrencies raises concern as bitcoin and other digital assets could be used in illegal activities such as money laundering and drug peddling.

Read also: Buhari’s man faults CBN ban on cryptocurrency trading

“The issue with some of the cryptocurrencies is that perhaps some care should be taken about their activities. The use of cryptocurrencies is a concern.

“That is why some central banks, not only in Nigeria, have these concerns about what kind of activities these cryptocurrencies are put and how best to monitor those activities.”

Aisen’s reason for caution is same with the CBN, but this warning has failed to curb the growing penetration of bitcoin, Litecoin, Ethereum and other cryptocurrencies. The persons, companies and institutional investors are purchasing bitcoin to grow their wealth.

The increasing acceptance is reflected in the valuation of Bitcoin, which was $1 as at the time it was created in 2009, but now trades above $50,000 in February 2021. As at December 2020, Bitcoin crossed $20,000 mark, but Bitcoin current price is $51,828.64 as at the time of filing this report.

By Fakoyejo Olalekan…

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