Crypto-Currency: IMF Backs CBN Ban, Says Bitcoin, Others Used For Money Laundering

The International Monetary Fund has supported the decision of the Central Bank of Nigeria to ban banks from facilitating transactions done with crypto-currencies.

The IMF confirmed that some of the crypto-currencies were being used for money laundering and drug trafficking.

The IMF Resident Representative for Nigeria, Mr. Ari Aisen, made this known during a virtual press briefing on the recently published 2020 Article IV IMF Staff Report for Nigeria.

The CBN had earlier this month ordered banks to close accounts linked to crypto-currency related transactions saying the currency is used to facilitate illicit transaction.
The apex bank had insisted that it is the only legal institution in the country that has the right to float a legal tender.

The Securities and Exchange Commission had last year issued a framework on crypto-currency regulation in the country. But on Thursday last week, it made a U-turn and backed the apex bank decision on Cryptos.

SEC had said that the CBN ban was consistent with its regulation as both parties were finding ways of securing investors and protecting the financial ecosystem of the country.

Nigeria is not the only country that had clamped down on crypto, as the European Union Central Bank last month accused Bitcoin of aiding money laundering and called for global regulation of crypto-currencies.

Also, the US Securities and Exchange Commission had in January warned investors against “too-good-to-be-true opportunities” in the crypto-currency space.

According to Ari Aisen, many central banks around the world, have taken similar policy decisions as the CBN.

He said, “The issue with some of the crypto-currencies is that perhaps some care should be taken about their activities. The use of crypto currencies is a concern.

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

“Some of them may be illegal activities and may be related money laundering, even drugs or other illegal things.

“It is natural that the monetary authorities will be concerned about how best to supervise and increase their oversight regarding the use of crypto currencies.

“The CBN is thinking closely about its trade-offs and is trying to design the best policy in the interest of the payment system and the sustainability of the financial sector.”

The IMF official called for “unification of foreign exchange rates,” to make the management of foreign exchange more transparent.

Aisen added, “There has been some level of scarcity of foreign exchange out there and it would be useful to unify rates to allow it fluctuate and to make forex more accessible to those who needed them.”

Speaking on Nigeria’s debt to GDP ratio, the IMF official said that “Nigeria’s Debt/GDP ratio has not reached a level of overt concern.”

He, however, cautioned government to ensure that debt/GDP was not allowed to reach a level that would make it unsustainable.

“It is important to manage borrowed funds properly for the economic benefits of the nation,” he added.