Digital Currency Trading Will Not Be Insured, Says Nigerian Regulator

News, Regulation | November 28, 2017 By:

The Nigerian Deposit Insurance Corporation (NDIC) has warned the public against the risk of trading digital currencies such as bitcoin.

Speaking at the NDIC workshop for Business Editors and Finance Correspondents, Mohammed Umar, director of research, policy and international relations (RPIR) at the NDIC, said the financial regulatory authorities are not playing catch-up on the digital currency race in Nigeria. He added that no central bank will accept digital currency as a substitute for its national currency or part of its monetary system, when it is not able to control it.

“Nigerians must understand that adequate notice has been issued by all financial sector regulatory authorities, namely Central Bank of Nigeria (CBN) and NDIC, to warn Nigerians who want to trade in bitcoins as gamblers,” said Umar. “They can only do so at their own risk. The CBN cannot say anyone cannot trade with it and NDIC will not insure trading in any currency not issued by the CBN.”

Umar stated that an inter-agency committee, involving the NDIC, Ministry of Justice, Economic and Financial Crimes Commission, EFCC, Nigeria Police, Department of State Security, DSS and other relevant agencies, had been established to, sanitise the system. The committee would closely monitor the activities of digital currency operators to ensure Nigerians were not exposed to unnecessary risks.

“If you can buy a bitcoin, nobody will stop you,” Umar said. “It is at your own risk. A bitcoin is not covered by the CBN rules, and NDIC will not insure it. We have consistently warned Nigerians that anyone who trades in bitcoin does so at his own risk.”

Earlier this year, the Central Bank of Nigeria passed a circular to inform all Nigerian banks that all transaction in bitcoin and other digital currencies have been banned in Nigeria. The circular stated that the move was necessitated by money laundering and terrorism financing risks inherent in operations of digital currencies.