Nigeria’s Central Bank Imposes $1.9M Penalty on 3 Domestic Banks for Crypto Transactions

Nigeria’s central bank has reportedly fined three domestic lenders for allowing transacting in cryptocurrencies.

The action is in line with the apex bank’s 2021 circular, where the Central Bank of Nigeria (CBN) had barred banks and other financial institutions from facilitating crypto trades or serving crypto users.

Strict compliance to ‘no crypto’ eule

According to Bloomberg, CBN fined Stanbic IBTC Bank, the domestic arm of Standard Bank Group, for 200 million naira ($478,595). Meanwhile, the country’s major lender, Access Bank Plc., was penalized to the tune of 500 million naira ($1,202,733). In addition, United Bank for Africa Plc (UBA) will shed 100 million naira ($240,547) as penalty.

It is alleged that Stanbic was pulled up for facilitating two accounts that might have been used for crypto transactions, as per Chief Executive Officer Wole Adeniyi. He added that while the bank is compliant with the regulatory directive, the sanctioned transactions might have circumvented the bank’s system.

Meanwhile, Access’ failure to shut crypto accounts and a crypto customer on UBA’s clientele might have got the lenders on the watchdog’s radar.

It is reported that CBN exclusively uses “advanced capability” to detect these loopholes in compliance.

In this regard, Adeniyi stated, “It doesn’t seem that they are going to entertain a refund, but they are now sharing intelligence with us to be able to kind of deter clients.”

P2P crypto transactions continue to rise

Despite the crypto sanctions,  Chainalysis had found last year that Nigeria is one of the many emerging countries with a high adoption index. It had found that the country contributes to a major chunk of transaction volumes on peer-to-peer (P2P) platforms. The blockchain data platform had also highlighted that Africa’s most populous country has the largest proportion of retail users conducting transactions under $10,000.

In addition, Nairametrics highlighted recently that despite a ban in place, citizens continue to trade crypto. The report found that Nigeria’s peer-to-peer transactions rose by 16% on an annual basis. Interestingly, Paxful and Localbitcoins, Nigeria’s P2P platforms, clocked a volume of $400 million.

Having said that, CBN has also officially launched its CBDC e-naira in October last year. However, data corroborated by analysts suggest that Nigerians prefer private crypto over e-naira. Despite some short-lived interest soon after the CBDC launch, reports highlight that the citizens turned back to crypto owing to Naira’s poor performance.

It is noteworthy that Naira’s free fall has been biting the economy for quite some time.

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