Senate summons CBN, SEC over ban on cryptocurrency

The recent ban of Cryptocurrency transactions in Nigeria by the Central Bank of Nigeria has prompted the Senate to summon the Governor of Central Bank, Godwin Emefiele, and Securities Exchange Commission for an explanation.

The Senate is inviting the apex bank and SEC through its Committees on Banking, Insurance and Other Financial Institutions; ICT and Cybercrime; and Capital Market to brief the Committees on the opportunities and threats of the Cryptocurrency on the nation’s economy and security and to report back findings within two weeks.

The resolution was sequel to the consideration of a motion and the subsequent adoption of a proposed amendment to its resolution by Senator Hassan Hadejia (APC – Jigawa North-East).

Sponsor of the motion, Senator Istifanus Dung Gyang (PDP – Plateau North) drew the attention of the Upper Chamber to the recent directive by the Central Bank of Nigeria, stopping all financial institutions from transacting in Cryptocurrencies, while recalling earlier directives by the apex bank in January 2017, and February 2018, which forbade banks not to use, hold, trade and transact in Cryptocurrencies.

The lawmaker noted that “the decision of the CBN is said to have been predicated on the need to safeguard the Nigerian economy from the adverse effects of the Cryptocurrency regime which are unregulated digital or virtual currencies that are issued by anonymous entities and secured by cryptography.”

Gyang observed that the CBN considers cryptography as a financial method that encrypts and hides codes that prevent oversight, accountability, and regulation – thereby violating and contravening existing law as only the Central Bank is authorized by law to issue legal tender.

“Concerned that Crypto currency by nature is anchored on anonymity, obscurity and concealment of its patrons and actors making it difficult if not impossible to trace, track and uncover those that may deploy it for ignoble and illegal usage such as money laundering, terrorism financing, drug purchase, cybercrime, etc.

“Aware that the action and directive of the CBN has attracted sharp reactions from Nigerians and has become a topical subject of National discussion; and.

“Realized that Cryptocurrency is both an opportunity and a threat, hence the Senate has a responsibility to ensure that the nation and citizens do not miss out on the opportunities that Cryptocurrency offers and in the same vein, mitigate and prevent likely consequential effects on the nation’s economy and security,” Gyang said.

Co-sponsor of the motion, Senator Mukhail Adetokumbo Abiru (APC – Lagos East), advanced side-by-side arguments for and against the accommodation of cryptocurrency transactions in Nigeria’s financial institutions.

According to him, the economic benefits associated with Cryptocurrency transactions cannot be eroded by the Central Bank’s ban.

Abiru said, “In Nigeria in particular, it is also important to underscore the fact that in the last five years, we have had people trading in cryptocurrency to the tune of over $500 million dollars, that’s to tell you how it is gradually gaining traction.

“Last year in particular, we had over $140 million dollars invested in cryptocurrency. Just like my colleague rightly said, there are challenges that cryptocurrency has also brought to the fore.

“You have the challenge to the financial system stability on its own, that is why the CBN is concerned; you also have the issues around cybercrime and also terrorism.

“Now, in particular, we must also mention that last year, during the EndSARS protest – the CBN banned the account of the EndSARS young lads – cryptocurrency was what they resorted to.

“Clearly, what it is telling us is that it is good to ban because of the challenges it has also presented. But, honestly, the reality is that banning it doesn’t take it away.”

The lawmaker, added, “In the US, as it is planning to come about the stimulus package of about $1.9 trillion dollars, one of the major investors there, Elon Musk, just recently on Monday put in about $1.5billion of his assets into cryptocurrency.

“What that has done is that the value of cryptocurrency has been further enhance. Today, I understand it is within the region of about $50,000 (USD) per Bitcoin.

“Even our Securities and Exchange Commission also agree and recognize cryptocurrency as a financial asset that they need to regulate their framework around.”