Nigerian public and law enforcement agencies have been urged to “stop the demonization” Blockchain and the cryptocurrency industry. An association advocating risk-based regulation for crypto industries says financial institutions shouldn’t use the Nigerian central banks directive to deny service to the industry.
Crypto Activity Regulations that are Risk-Based
An association representing the crypto and blockchain industry has urged Nigerian law enforcement authorities and public to cease demonizing or discriminating against crypto and blockchain entities. Stakeholders of Blockchain Technology Association of Nigeria (SIBAN), argues that Nigeria requires risk-based regulation of crypto activities and capacity building.
SIBAN released a press statement affirming that it believes the directive issued by Central Bank of Nigeria on February 5, 2021 did not ban cryptocurrency in Nigeria. Yet, despite there being no law that provides for the arrest or persecution of crypto entities, the association’s statement said industry players are being targeted.
“From time to time, instances of undue arrest and detention, bank-account blocking and closures, discrimination, extortion, harassment, intimidation, seizures, and queries, are experienced by persons or entities involved in any blockchain or cryptocurrency activity in Nigeria, particularly since the CBN cryptocurrency directive of 2021,” the statement said.
Besides asking security agencies to recognize the blockchain and cryptocurrencies, SIBAN implored banks and other financial institutions to “appreciate the difference between blockchain technology and cryptocurrency.” The advocacy group said in instances where cryptocurrency is not involved, banks and other financial institutions should not use the CBN directive to justify denying service.
Capacity building recommended
SIBAN also said that it would be detrimental to the banking system if the agencies insist on treating blockchains the same as cryptocurrencies. This statement warned of the repercussions should such a move be made.
If treated as the same, the CBN’s very own blockchain-powered eNaira and any other blockchain-powered product or service in the country would be affected in Nigeria’s banking and financial system as well. The CBN does not intend for this to happen.
To help Nigerian agencies stop treating or likening the blockchain to cryptocurrencies, the advocacy group recommended “capacity building in blockchain and cryptocurrency, particularly AML-CFT for virtual assets, to banks and other financial institutions.”
Meanwhile, SIBAN, which describes itself as a pro-innovation and pro-regulation association, said while it encourages its members to “adhere to the rule of law” it will nevertheless “will explore administrative and legal options to seek redress” in instances where their rights are violated. However, this statement suggests that the association will work with regulators in the event of such requests.
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