September 12, 2024

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Naira and Dollar
Features

FG’s multi-pronged, multi-agency approach to stabilising the Naira

By Kayode Adebiyi, News Agency of Nigeria (NAN)

In a country that has its legal tender, it is surprising how the dollar and its exchange rate determine almost every transaction in Nigeria to the detriment of the local currency – the naira.

More surprising is how the same foreign exchange has two different values, depending on where it is being traded.

As a result of the exchange rate volatility of the naira, President Bola Tinubu announced the floating of the Nigerian currency to peg the activities of unwholesome middlemen in his inaugural speech on May 29, 2023.

The idea of floating the naira means that people can get forex at the banks at affordable rates.
Banks and other institutions can buy and sell dollars at their rates.

Financial experts say, ordinarily, this should have been sufficient enough to boost the power of the Nigerian currency.

Welcomed by many, the measure failed to produce the desired result and seemed to plunge the Nigerian currency into further deep against major foreign currencies.

In response, the Central Bank of Nigeria (CBN) initiated a comprehensive strategy to enhance liquidity in the forex market, including unifying FX market segments, clearing outstanding FX obligations, and introducing new operational mechanisms for Bureau De Change operators.

Others are enforcing the Net Open Position limit for commercial banks, and adjusting the remunerable Standing Deposit Facility Cap. Yet, the naira keeps dropping in the forex market.

The apex bank also said that Nigerians spent about $98bn on foreign trips, medical tourism, and overseas education, which was by far more than the total foreign exchange reserves it had.

Also, it was realised that merchants on crypto platforms list their exchange rates for buying US dollars for naira and aim to attract sellers by proposing high naira values for the US dollar.

To remain competitive and attract sellers, merchants advertise higher dollar-to-naira rates than they are willing to pay, causing the visible dollar rate to increase and the implied value of the naira to decrease.

Worried by the continued depreciation of the Nigerian currency, the federal government decided to make further concerted efforts to safeguard Nigeria’s foreign exchange market and combat speculative activities.

Central to those efforts is a multi-pronged and multi-agency approach, which saw the Office of the National Security Adviser (ONSA) and the CBN joining forces to address challenges impacting the nation’s economic stability.

The collaborative approach to tackle these infractions also involves a coordinated effort with key law enforcement agencies, including the Nigeria Police Force (NPF), the Economic and Financial Crimes Commission (EFCC), the Nigeria Customs Service and the Nigeria Financial Intelligence Unit (NFIU).

Indeed, the decision to join forces to tackle the challenge at hand is in line with the provisions of Nigeria’s National Security Strategy (NSS 2019).

Chapter Five of the document spells out measures to achieve economic security.

“Our overall national security agenda, including sustainable development, prosperity and external influence is dependent on a viable and prosperous economy.

“We will integrate our economic potential and opportunities with other components of national security for the prosperity of our people…

“We will uphold the principle of free enterprise; and create an equitable business environment to promote an efficient, dynamic, and self-reliant economy.”

Most importantly, it emphasises the need for collaboration: “All relevant Ministries, Departments and Agencies (MDAs) or institutions established for national economic management will collaborate to ensure effective and efficient implementation of the economic objective of this Strategy.”

In a 2021 article on the NSS, Chukwuemeka Uwanaka almost predicted the scenario that called for the multi-agency response against naira depreciation when he wrote: “On the economy, the ONSA should play a more collaborative role in the fight against financial crimes and official corruption.

“This will ensure that the increased expenditure and appropriation in the social sector are not lost in the procurement process.”

Authorities said the primary objective of the multi-agency and multi-sector collaboration was to systematically identify, thoroughly investigate and appropriately penalise individuals and organisations involved in wrongful activities within the FX market by leveraging the expertise of these agencies.

The CBN maintained that, despite proactive and commendable measures taken to stabilise the foreign exchange market and stimulate economic activities, the effectiveness of its initiatives was being undermined by the activities of speculators.

These speculators, it said, operate through various channels, thereby exacerbating the depreciation of the Nigerian Naira and contributing to inflation and economic instability.

In what has been hailed as a decisive action to address the depreciation of the naira against the dollar, the Nigerian government blocked the online platforms of Binance and other crypto firms.

This move aimed to prevent further manipulation of the forex market and curb illicit fund movements. Other platforms blocked include Forextime, OctaFX, Crypto, FXTM, Coinbase, and Kraken, as part of the government’s efforts.

The government also disclosed its intention to raise $10 billion to enhance liquidity in the foreign exchange market, indicating its commitment to addressing the challenges faced by the currency.

On its part, ONSA issued directives to law enforcement agencies to take strict actions against individuals involved in speculation in the foreign exchange market.

Before then, the Economic and Financial Crimes Commission (EFCC) raised a 7,000-man special task force across its 14 zonal commands to clamp down on dollar racketeers.

While answering questions from journalists on the recent restriction on Binance and other cryptocurrency platforms, the CBN Governor, Olayemi Cardoso, said, in the last year, more than $26 billion was funnelled through Binance without a trace.

He added that the CBN was moving to a very aggressive regulatory environment.

“Tolerance for people who will not abide by the regulations that are coming out is zero. People will have to comply with our regulations or face the consequences for not doing so,” he said.

Bayo Onanuga, Special Adviser to the President on Information and Strategy, said in an interview that by taking these measures, the federal government is trying to prevent economic saboteurs from ruining the country.

“We have saboteurs. Look at what Binance is doing to our economy. That is why the government moved against Binance.

“Some people sit down using cyberspace to dictate our exchange rate, hijacking the role of the CBN. They just sit down and fix anything they like. It’s sabotage, and we are trying to prevent that from happening henceforth,” he said.

The considerable results these various measures of government have produced within a short time not only point to a right step in the right direction. They also show the ability of the present administration to respond adequately to Nigeria’s economic and other challenges.(NANFeatures)
**If used please credit the writer and News Agency of Nigeria

Naira and Dollar
Features

NEWS ANALYSIS: What forces are aiding the free fall of the Naira?

By Ismail Abdulaziz, News Agency of Nigeria (NAN)
Inspite of all efforts made by the Central Bank of Nigeria (CBN) to address the exchange rate volatility of the naira since the Bola Tinubu administration announced the floating of the Nigerian currency to peg the activities of unwholesome middlemen, stakeholders continue to wonder why the naira is still in free fall.

The CBN had initiated a comprehensive strategy to enhance liquidity in the forex market, including unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for Bureau De Change operators, enforcing the Net Open Position limit for commercial banks, and adjusting the remunerable Standing Deposit Facility Cap.
Yet, the naira keeps dropping in the forex market.

Indeed, there are palpable factors that have aided the fall of the naira, as explained by the CBN. For instance, the apex bank reported that Nigerians spent about $98 billion on foreign trips, medical tourism, and overseas education, a figure the bank said was more than the total foreign exchange reserves of the apex bank.

Responding to that alarm, the Economic and Financial Crimes Commission (EFCC) raised a 7,000-man special task force across its 14 zonal commands to clamp down on dollar racketeers and reduce the pressure on the naira.

The floating of the naira means people can get forex at the banks for whatever rate the banks can afford to sell it. Banks and other institutions can buy and sell dollars at their rates.

Financial experts say, ordinarily, this should have been sufficient enough to boost the power of the Nigerian currency.

However, in spite of all these measures, it appears that the unfortunate crisis bedeviling the naira has the voice of Jacob, but the hands of Esau.

According to a document obtained, recent intelligence reports have highlighted continued illicit activities within the Nigerian foreign exchange market, in both virtual and in physical transactions, and one name has been a reoccurring decimal – Binance.

The Binance platform describes the organisation as a cryptocurrency exchange that lists more than 350 cryptocurrencies globally. In addition to cryptocurrency trading, it offers several services that enhance the experience for users and blockchain developers.

The report said the crypto platform’s merchants list their exchange rates for buying US dollars for Naira and aim to attract sellers by proposing high Naira values for the US dollar.

To remain competitive and attract sellers, the report said merchants advertise higher dollar-to-naira rates than they are actually willing to pay, causing the visible dollar rate to increase and the implied value of the naira to decrease.

“This practice has contributed to the Naira’s 113.1 per cent devaluation against the US dollar from February 9, 2023, to February 15, 2024. This implies an average daily depreciation rate of 0.3 per cent over the last 371 days – a period of high activity on the Binance platform,” the report said.

In June 2023, The Securities and Exchange Commission (SEC) ordered Binance, which happens to be the world’s largest cryptocurrency exchange, to halt its operations in Nigeria for courting investors through an illegal website.

“Binance Nigeria Limited is hereby directed to immediately stop soliciting Nigerian investors in any form whatsoever,” SEC said.

Sources close to forex regulators in Nigeria said the government had sought several avenues to reach a middle ground between an outright ban on Binance crypto assets and their unregulated use, but the platform has been adamant, continuing its manipulation of the nation’s forex market and illicit movement of funds.

Curiously, the Nigerian regulators were not acting alone. That same week, the U.S. Securities and Exchange Commission sued Binance and Coinbase for allegedly breaching its rules.

Scores of other countries have either outrightly banned or restricted the operations of Binance, including the UK, Japan, Singapore, Canada, The Netherlands, China, Turkey, Indonesia, and Nigeria’s neighbours, Ghana.

There are specific country-by-country examples of how Binance has been violating regulatory standards and undermining legitimate forex trade.

In November 2023, Binance and its CEO pleaded guilty to federal charges in the US for violating anti-money laundering laws and facilitating transactions with sanctioned entities and individuals.

They agreed to pay over $4 billion in fines and forfeitures.

In June 2020, Binance was accused by the Japanese Financial Services Agency of operating in Japan without a license and enabling money laundering activities. Binance denied the allegations and claimed to have no exchange business in Japan.

In February 2020, Binance was accused by the Brazilian tax authorities of evading taxes and laundering money through its platform. Binance denied the allegations and claimed to comply with local regulations.

In April 2019, Binance was blacklisted by the French financial regulator, Autorité des Marchés Financiers, for offering crypto derivatives products to French investors without authorization.

In July 2020, Binance was warned by the UK Financial Conduct Authority for operating in the country without a license and posing a risk to consumers and the financial system.

According to sources, the list of countries that have taken action against Binance is endless.

However, some financial experts say what worries monetary regulators the most is how the continued use of digital currencies such as Binance raises concerns about potential exploitation for money laundering and a means for receiving proceeds of crime by criminal groups in the country.

They say recent events have indicated that the decentralised nature of crypto poses a risk for exploitation in financial exchanges.

It is easy to see why criminals, including terrorists and cybercriminals, can convert illicit funds into cryptocurrencies, transfer them across borders, and then convert them back into conventional currencies, making it difficult for authorities to trace the origins of the funds.

It can also offer a means for corrupt officials and businesses to siphon and clean up the proceeds of corruption.

The world over, cybercriminals exploit the lucid nature of crypto to receive proceeds of crime mostly from unsuspecting victims; an occurrence for which Binance has been punished or banned in many countries.

No doubt, the digital currency ecosystem offers substantial economic growth opportunities. However, as the creation of tech personalities for financial exchange, operating independently of any central regulatory framework or authority means that it is exposed to exploitation for money laundering and financial crimes.

It is therefore important for platforms such as Binance to operate responsibly and support the financial stability of countries where they operate rather than undermine it.
**If used, credit the writer and the News Agency of Nigeria (NAN)

CBN Governor, Yemi Cardoso
Business , Economy/Business

CBN lifts ban on cryptocurrency transactions

By Kadiri Abdulrahman

The Central Bank of Nigeria (CBN) has lifted the ban it imposed two years ago on cryptocurrency transactions in the Nigerian banking system.

The CBN announced the reversal of the policy in a circular by Haruna Mustapha, its Director, Financial Policy and Regulation.

Mustapha said that the apex bank would now provide regulations for financial institutions on how to manage cryptocurrency to avoid misuse.

The News Agency of Nigeria (NAN) recalls that the CBN issued a circular in February 2021 restricting banks and other financial institutions from operating accounts for cryptocurrency service providers.

The then CBN Governor, Godwin Emefiele, had announced that the restriction was necessary in view of the money laundering and terrorism financing risks posed by cryptocurrency.

Emefiele also said that the vulnerability inherent in cryptocurrency operations, as well as the absence of regulation and consumer protection measures were also responsible for the policy.

According to Mustapha, current global trends have shown that there is need to regulate the activities of Virtual Assets Service Providers (VASPs) which include cryptocurrencies and crypto assets.

“Following this development, the Financial Action Task Force (FATF) also updated its recommendation to require VASPs to be regulated, to prevent misuse of virtual assets.

“In view of the foregoing, the CBN hereby issues this guidelines to provide guidance to financial institutions under its regulatory purview in respect of their relationship with VASPs in Nigeria.

“The guidelines supersedes the CBN circular of Feb. 5, 2021on the subject,” the director said.

He, however, warned that banks and other financial institutions were still prohibited from holding, trading or transacting in cryptocurrencies on their own account. (NAN)(www.nannews.ng)

=============
Edited by Idris Abdulrahman

Economy/Business

Osinbajo advocates knowledge-based regulation for cryptocurrency

Vice President Yemi Osinbajo says there is need to develop a robust regulatory regime that is thoughtful and knowledge-based for cryptocurrency.

Osinbajo said that rather than adopt a policy that prohibited cryptocurrency operations in the country, regulators must act with knowledge and not fear.

Osinbajo’s spokesman, Laolu Akande, in a statement on Friday in Abuja, said the vice president virtually delivered a keynote address at a one-day economic summit.

The summit was organised by the Central Bank of Nigeria (CBN), the Banker’s Committee, and the Vanguard Newspaper, themed “Bankers’ Initiative for Economic Growth”.

“I fully appreciate the strong position of the CBN, Securities and Exchange Commission (SEC) and some of the anti-corruption agencies on the possible abuses of cryptocurrencies and their other well-articulated concerns.

“ But I believe that their position should be the subject of further reflection.

“There is a role for regulation here. And it is in the place of both our monetary authorities and SEC to provide a robust regulatory regime that addresses these serious concerns without killing the goose that might lay the golden eggs.

“So it should be thoughtful and knowledge-based regulation not prohibition; the point I am making is that some of the exciting developments we see call for prudence and care in adopting them, but we must act with knowledge and not fear.”

Osinbajo said that there was no question that blockchain technology generally and cryptocurrencies, in particular, would soon challenge traditional banking, including reserve (Central) banking, in unimaginable ways.

According to him, there is need to be prepared for that seismic shift as it may come sooner than later.

“Already remittance systems are being challenged; blockchain technology will provide far cheaper options to the kind of fees being paid today for cross-border transfers.

“I am sure you are all aware of the challenge that the traditional SWIFT system is facing from new systems like Ripple which is based on the blockchain distributed ledger technology with its own crypto tokens.

“There are, of course, a whole range of digital assets spawned daily from block-chain technology. Decentralized finance, using smart contracts to create financial instruments, in place of central financial intermediaries such as banks or brokerages is set to challenge traditional finance.

“`The likes of Nexo finance offer instant loans using cryptocurrency as collateral; some reserve banks are investigating issuing their own digital currencies.”

On national development and the public and private sector interventions, the vice president emphasised that in order to engender sustained economic growth, stakeholders must think in terms of scale.

He said he was quite concerned that national interventions were classified as pilots involving sometimes no more than 1000 people.

“Given the size of our population, we cannot afford the luxury of pilot projects; we should design our interventions very carefully and then go big.

“It was quite puzzling to me when people said that our plan to build 300,000 houses under the Economic Sustainability Plan(ESP) was too ambitious a target.

“After all, these just amounts to 400 houses per local government yet many of our local governments are larger than some African countries who would not consider building 400 houses in one year as too onerous a task.

“The task of national development requires that we fire on all cylinders after all, at one stage, China was building 1.9 million housing units per year over a number of years,” he said.

He said that the Federal Government had a track record of building roads, rail and power projects across the country.

Osinbajo said that in spite of the commitment so far, the nation was still very far away from meeting the full infrastructural needs of its economy.

The Vice President called for improved support especially from the private sector in the operationalisation of the Infrastructure Company (InfraCo).

On the country’s recovery from its second recession in four years, Osinbajo said policymakers, lawmakers and business leaders had cause to cheer the relatively good performance in the face of the negative impact of the COVID-19 pandemic.

He attributed successes recorded to the early actions of the Federal Government in providing an initial stimulus and then, constituting the Economic Sustainability Committee and the ESP

Participants at the forum included the Governor of Lagos State, Mr Babajide Sanwo-Olu and CBN Governor, Mr Godwin Emefiele.

Others were representatives of the Minister of Finance, Budget and National Planning, the Founder of Vanguard Newspaper, several banking executives, among others. (NAN)

 

Business , Economy/Business

Stakeholders appeal to FG to regulate cryptocurrency market

By Oladele Eniola

Some stakeholders in the cryptocurrency market on Monday appealed to the Federal Government to lift the ban on its transactions.

The stakeholders advised the government to rather initiate regulations and guidelines that would protect consumers’ investments in the market.

The Central Bank of Nigeria (CBN) had on Feb. 5, prohibited the trade of cryptocurrency and facilitating payment of cryptocurrencies in banks and other financial institutions.

However, following the ban, CBN issued a five-page statement clarifying its position on cryptocurrencies after a regulatory warning to local banking institutions sent shock waves through social media.

In the statement, CBN said the Feb. 5 letter was only a reminder that cryptocurrencies were not legal tender in Nigeria and was reiterating a position the bank had held since 2017, and was not imposing new restrictions on the industry.

Mr Seun Dunia, the Chief Executive Officer of Tradefada.com, a Cryptocurrency Company, said that the Federal Government through the CBN should come up with guidelines to regulate the activities of cryptocurrency market and protect consumers’ investments.

Dania told the News Agency of Nigeria (NAN) in Lagos that the ban would subject people to hardship, adding that many people who had been rendering services in the industry would become unemployed.

“Cryptocurrencies are the biggest financial innovation of the fourth industrial revolution and Nigerians must not be exempted from participating in one of the largest transfers of wealth to be witnessed in recent times.

“In some parts of the world, cryptocurrency is used for conducting transactions in financial institutions.’’

He said that the government should not ban such trading at a time when some people were beginning to show interest in the market.

“This particular trade helped so many people, both the young and the old to get by, especially during the pandemic period and also to deal with the after effect of the pandemic.’’

Dania said that banning it at this critical period would not be good because many people who were into this type of trading would be rendered jobless.

“We appeal to the Central Bank to lift the prohibition placed on regulated financial institutions from providing financial services and reverse the order to close all their bank accounts,” he said.

He said that some of the registered companies functioning as exchanges had been affected negatively by the ban, while crypto transactions had continued in the black market.

He said that his firm and some other innovative Nigerian exchanges were servicing high level customers with due diligence were being observed in addition to some of the strictest anti-money laundering policies in line with international financial standards.

“CBN should see these exchanges as their partners whom they should work with and learn from,’’ he said.

Dania said that trading in cryptocurrencies had become global and could help the economy to grow in many ways.

“There are sophisticated tools which stakeholders have access to that can be very useful to the Federal Government.

“This includes chain analysis which has helped several countries to solve high-level crimes associated with cryptocurrencies.

“Trading in cryptocurrencies has also helped Nigeria in job creation.

“The industry has employed and grown several block chain and software developers, traders, educationists and other direct and indirect opportunities.’’

Mr Tayo Akinteju , who trades on Tradefada.com also joined  other traders in Cryptocurrency to plead with the Federal Government to reverse the ban.

Akinteju said that the platform had helped him to cushion the effects of the pandemic during the lock down.

“I lost my job during the pandemic. So, a friend introduced me to the platform and taught me how to trade.

“When I got to understand the basics, I was so happy because it helped me to get by as I was able to provide for my family.

“The recent ban has made it a major setback for me,” he said.

Mr Nuru Saheed, another stakeholder also called for the lifting of the ban, noting that sustaining it would add to the sufferings of the people.

“The platform should be regulated; if that is done, the government will be able to control the market.

“The total ban of the market will have negative effects on the country’s economy,” he said.

NAN reports the since the announcement by the CBN, some global exchanges had suspended the Naira deposits on their platforms. (NAN)

Business , Economy/Business

Cryptocurrency ban: Experts optimistic of stock market rebound

By Chinyere Joel-Nwokeoma

Capital Market experts on Monday expressed optimism that the ban on cryptocurrencies by the Central Bank of Nigeria (CBN) would likely trigger enhanced activities in the nation’s stock market.

They said this an interviews with the News Agency of Nigeria (NAN) in Lagos, while speaking on projections for stock market this week.

It will be recalled that the apex bank in a press statement on Feb. 7 directed the Deposit Money Banks and other financial institutions to desist from transacting in and with entities dealing in cryptocurrencies.

Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., said the ban would trigger flow of funds to the equities market in search of higher returns.

Omordion said the development would support market rebound as earnings season for 2020 financial result would start trickling in.

“The ban on cryptocurrency will trigger circular flow of funds searching for a better return as the equity market today is ahead of year-on-year headline inflation.

“The market is expected to rebound in the new week on earnings season kicking off with early fliers that will come with dividend report.

“We advise that you target dividend-paying stocks and fundamentally sound companies with growth prospect in 2021, especially given the low interest rates regime and sustained oil price rally that have so far supported the economy and equity market,” he said.

Also speaking, Prof. Uche Uwaleke, President, Association of Capital Market Academics of Nigeria, said the ban would boost investors’ confidence in the equity market.

Uwaleke urged the CBN and the Securities and Exchange Commission (SEC) to come up with a regulatory framework for cryptocurrency  asset trading in Nigeria.

“Given that cryptos have come to stay, the CBN and the SEC should come up with a regulatory framework for crypto asset trading in Nigeria.

“Given the weighty nature of the directive, I want to believe that the CBN must have consulted relevant stakeholders including the Bankers Committee before taking the decision.

“I am inclined to believe that it was well thought through and not a unilateral decision.

The fact is that what the CBN could see in a squatting position, many cannot see standing.

“So, I think the directive should be seen in the light of this fact that the CBN may have information which may not be available to the public,” Uwaleke said.

He recalled that not too long ago at some point, China, widely seen as the home of cryptocurrencies, had to ban trading in bitcoins.

Meanwhile, the NSE All-Share Index last week dropped 703.57 basis points or 1.66 per cent to close at 41,709.09 from 42,412.66 achieved in the corresponding week.

Also, the market capitalisation which opened at N22.186 trillion lost N367 billion to close at N21.819 trillion.

However, a total turnover of 2.77 billion shares worth N29.68 billion were exchanged by investors in 31,380 deals last week.

This was in contrast with 2.57 billion shares valued at N27.88 billion transacted in 31,466 deals in the corresponding week. (NAN)

General News

Cryptocurrencies speculative, unreliable, says CBN

By Kadiri Abdulrahman

Transactions in cryptocurrencies are largely speculative, volatile and should be discouraged, the Central Bank of Nigeria (CBN) says.

The apex bank gave the explanation in a statement on its official website, by Mr Osita Nwanisobi, Acting Director of Communications.

The explanation is coming on the heels of widespread reactions to the CBN’s recent  directive prohibiting cryptocurrencies transactions by Deposit Money Banks (DMBs).

Nwanibosi stated that the nature of cryptocurrencies created a perverse incentive that allowed for speculation and volatility

“Evidence now suggests that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment, thus explaining the significant volatility and variability in their prices.

“Because the total number of Bitcoins that would ever be issued is fixed (only 21 million will ever be created), new issuances are predetermined at a gradually decelerating pace.

“This limited supply has created a perverse incentive that encourages users to stockpile them in the hope that their prices rise.

“Unfortunately, with a conglomeration of desperate, disparate, and unregulated actors comes unprecedented price volatility that have threatened many sophisticated financial systems.

“ In fact, the price of ether, one of the largest cryptocurrencies in the world, fell from 320 dollars to 0.10 dollars in June 2017. The price of Bitcoins has also suffered similar volatilities,’’ he said.

He said that cryptocurrencies do not have real values and cannot be trusted to generate returns on investments.

“Unlike Fiat Money which is accompanied by  full faith and comfort of a country or Central Bank, cryptocurrencies do not have any intrinsic value and do not generate returns by themselves.

“ When one buys a stock, say of a conglomerate in the Nigeria Stock Exchange, its price reflects the activity and production of that conglomerate and the value people place on their goods and services.

“ This price may rise as the conglomerate produces better goods or services and probably gains greater market share.

“In contrast, cryptocurrencies do not have fundamentals and would never have fundamentals.

“Investors only buy in the hope that its use and acceptability will rise, thereby pushing up its demand and price.

“But since new versions of cryptocurrencies come on stream with new mathematical models, an infinite supply may someday crash the price to zero,’’ he warned.

He, however, assured that CBN’s actions was not meant to discourage technology-driven payment systems but to boost it.

“At this juncture, the CBN would like to assert that our actions are not in any way, shape or form inimical to the development of FinTech or a technology-driven payment system.

“On the contrary, the Nigerian payment system has evolved significantly over the last decade, leapfrogging many of its counterparts in emerging, frontier and advanced economies propelled by reforms driven by the CBN.

“This is evident from the variety of participants, products, channels, cutting-edge technology in the payments system.

“ It is also validated by the astronomical growth of volume and value of transactions.

“Nigeria is an investment destination of choice for international financial technology companies because of CBN’s policies that have created an enabling investment environment in the payments system,’’ he said.

The director added that innovations in Nigeria’s payment system were catalysed by regulatory reforms driven by the CBN.

He said such reforms included the issuance of a raft of guidelines and regulations on Operations of Electronic Payments Channels in Nigeria; Transaction Switching; Card Issuance and Usage, and Licensing of payment service providers.

“The robust regulatory framework put in place by the Bank opened up the payment system to innovation with several new players across in the following licensing categories-

“Payment Terminal Service Providers (PTSPs), Payment Solution Service Providers (PSSPs), Mobile Money Operators (MMOs), Payment Terminal Application Developers (PTSAs), Switches, Super Agents,  Agents and Payment Service Banks (PSBs)

“This has created both direct and indirect jobs for Nigeria’s youth population.

“Several other initiatives are being implemented to further support FinTech development and creation of jobs. These include regulatory sandbox and open banking principles that the Bank recently implemented.

“The recent regulatory directive became necessary to protect the financial system and the generality of Nigerians from the risks inherent in crypto assets transactions.

“The risks have escalated in recent times, with dire consequences for the integrity of the financial system and financial stability,’’ he said.

He emphasised that cryptocurrencies were largely speculative, anonymous and untuntraceable.

“They are increasingly being used for money laundering, terrorism financing and other criminal activities.

“ Small retail and unsophisticated investors also face high probability of loss due to the high volatility of the investments in recent times.

“In light of these realities and analyses, the CBN has no comfort in cryptocurrencies at this time.

“We will continue to do all within its regulatory powers to educate Nigerians to desist from its use and protect our financial system from activities of fraudsters and speculators,” he said.

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