CBN’s letter released on the 5th of February shook everyone in the Nigerian crypto community. Since the release of the Central Bank of Nigeria’s letter, there have been different interpretations of the letter and what it means for Nigerians and their crypto. Some have been funny, some sad, and some untrue. So we’ve decided to break it down and give you the gist of the matter.
First of all, CBN’s letter was directly addressed to:
- Deposit Money Banks (E.g Access Bank , First Bank, etc)
- Non-bank Financial Institutions (E.g Flutterwave, Paystack, etc)
- Other Financial Institutions (E.g mutual funds, Asset managers, etc)
The letter referred to an earlier letter CBN released in January 2017, telling banks not to hold or transact with crypto. Also to make sure that crypto exchanges do all the necessary KYC for their customers.
Sadly, this latest letter has completely stopped Nigerian banks and Fintech companies from dealing with crypto exchanges. This means that exchanges cannot operate bank accounts with Nigerian banks at the moment.
How Does this Affect Cryptocurrencies?
Since CBN’s policies affect the Naira, this letter only affects naira deposits and withdrawals. Cryptocurrencies are not controlled by any organisation or central authority like CBN. So if your money is already in the form of crypto, you can do what you want with it including buying, selling, sending, receiving, and trading it.
Are Cryptocurrency Exchanges Banned in Nigeria?
Cryptocurrency exchanges are not banned in Nigeria. The government has only stopped banks and financial institutions from conducting payments with exchanges. This means that your money is safe in your crypto exchange wallet and you can still transact with it. You just can’t deposit naira or withdraw naira into a Nigerian bank account.
CBN’s Letter: What This Means for You
First of all, your funds are safe so you can breathe and relax. Several crypto exchanges have released statements saying they are working on the issue. You can expect to have problems depositing money as their payment partners comply with CBN’s letter. As for withdrawals, they may also be a little bit slow.
For now, here are some answers to questions you may have:
Can I deposit Naira in a Crypto Exchange?
All Naira deposits are on hold based on the Central Bank of Nigeria’s (CBN) letter to banks.
Can I withdraw Naira from a Crypto Exchange?
Naira withdrawals to Nigerian bank accounts have been placed on hold by several exchanges. But exchanges are working on alternatives to get withdrawals back up.
Why are Crypto Prices on Crypto Exchanges Currently Low?
Exchanges don’t control the price of cryptocurrencies. This is determined by buyers and sellers.
Because of the CBN update, there are less buyers and sellers on exchanges and this affects prices. Here’s more info on why crypto prices are usually different across platforms.
Are my funds safe?
Yes, all your funds are safe and secure.
The situation is still developing and we’ll continue to update you. For now, you can rest easy knowing that your money is safe. In the meantime, you can transact with it in the form of cryptocurrency.