The Nigerian Government has raised serious concern over the gradual penetration of the country’s currency market by cryptocurrency, saying the development could facilitate possible terrorist financing and money laundering.
Cryptocurrency, otherwise known as virtual currency, according to online reports, is a form of “digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank”.
The nature of the currency, its operations as well as global acceptability, were the subject-matter of a two-day conference organised by the Presidential Advisory Committee Against Corruption (PACAC), which began yesterday in Abuja.
Tagged Understanding The Interface Between Cryptocurrency And Money Laundering, the conference seeks to provide clarity on the nature of virtual currency, benefit and danger, as well as the urgent needs for legislative and regulatory frameworks.
In his Goodwill message at the opening session of the seminar the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, called for continuous conversation on the development, even as he urged financial institutions to brace up to the reality of cryptocurrency.
Emefiele, who was represented by Mr. K. Amugo, also put the global market capitalisation of cryptocurrency, as at October, at a whopping US$203 billion.
The CBN Governor, however, disclosed that the virtual currency was neither permitted nor prohibited.
He said: “As the global use of crypto-currency with the associated inherent risks continues (sic) to gather momentum, the need for legislative and regulatory frameworks to address the challenges became imperative.
“Information from coimarketcap.com indicates that crypto-curtencies global market capitalisation currently stands at approximately US$203 billion as at end (of) October 2018.”
According to Emefiele: “This is an indication that cryptocurrency may become a major part of the financial system and it is currently offering new and exciting opportunities as well as challenges to the industry and Regulations”.
Notwithstanding, Emefiele insisted that: “Presently, there is no legal frameworks for the regulation of crypto-currencies in Nigeria. Based on existing regulations, the use of crypto currency in Nigeria is neither permitted nor prohibited”.
Also speaking the PACAC’s chairman, Prof. Itse Sagay (SAN), described cryptocurrency as a “stateless phenomenon”, expressing fear of possible manipulation of the system for criminal activities.
Sagay argued that as it stood, cryptocurrency only benefits operators; not society.
“The development, wide adoption, and operations of virtual currencies across the world, are both beneficial and disruptive. Notwithstanding the dangers of cryptocurrencies, benefits could accrue from them to persons, particularly in providing low cost remittance, foreign exchange services, access to …financial production, and as a driver of innovations online.
“In fact, this phenomenon seems to be a stateless type of phenomenon. From my own perspective, the only beneficiaries of the system, are those who operate them, and those who trade in them; not society.
“Also, there is a dark side, which includes the use of virtual currencies for criminal activities.”
He submitted that: “Due to the upswing in the use of virtual currencies by criminal groups, legislative and regulatory frameworks need to be adopted, updated in response to these new challenges, particularly with respect to the fight against money laundering and terrorist financing.
“It is necessary, therefore, that there should be at least some regulations provided in this sector, in order to prevent it from being a new avenue for criminal activities and evasion of social responsibilities”.
On his part the Director General/Chief Executive Officer of National Information Technology Development Agency, Dr. Isa Ibrahim, said the consequences of the lack of existing regulatory and legislative framework for the evolution, are “grave”.
Ibrahim disclosed that: “The CBN committee discovered that as at early 2017, politically exposed persons where (sic) buying as much as N1.2 billion worth of cryptocurrency for the purpose of offshoring their wealth from the searching eyes of the Nigerian officials.”
Also lending his voice to the cryptocurrency reality the Attorney General of the Federation (AGF) and Minister of Justice, Mr. Abubakar Malami (SAN), noted that the nation was at a “crossroads”, given that the emerging markets remained unregulated.
Represented by Mr. George Malami said: “I have been directed to welcome all of you to this meeting, and to first of all thank the Presidential Advisory Committee Against Corruption, for deeming it fit to delve into this area, considering the kind of disruptive (tendency in the) adoption of virtual currencies, and the level at which our citizenry are beginning to participate in the activities – whether as legitimate users or on the flip side of it, to the negative aspect.
“Therefore, it is very important also, bearing in mind that we are at a crossroads, where presently, the Central Bank (of Nigeria), the Security and Exchange Commission, had issued statements saying, virtual currencies are not legal tenders in our country…
“It is, therefore, the Attorney General’s hope, that the outcome of this deliberations, will help us in fine-tuning our national policy response regarding the use…the adverse effect of the adoption of virtual currencies”.
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