CBN, SEC Dragged To Court over Ban on Cryptocurrency

CBN, SEC Dragged To Court over Ban on Cryptocurrency.

The Digital Rights Lawyers Initiative, a civil society organization, has sued the Central Bank of Nigeria (CBN) and Securities and Exchange Commission (SEC) to court over its ban on cryptocurrencies.

It can be recalled that the Central Bank of Nigeria (CBN) has ordered banks in the country to shut down the accounts of cryptocurrency traders.

The CBN in its directive, told Deposit Money Banks (DMBs), Other Financial Institutions (OFIs), and Non-Bank Financial Institutions (NBFIs) local financial institutions to stop any transactions in crypto or facilitating payments for crypto exchanges.

The apex bank in the circular signed by Director of Banking Supervision, Bello Hassan, and Director, Payments System Management Department, Musa I Jimoh warned that disobedience to the directive will attract sanctions.

 “Breaches of this directive will attract severe regulatory sanctions,” the CBN warned

But in a filed on Monday, February 8, 2021 at the Federal High Court in Lagos, the group said the CBN, which is the first defendant, lacked the power to restrict financial institutions from dealing in cryptocurrency transactions.

The lawyers argued that the second defendant, SEC, had in a circular dated September 14, 2020, declared cryptocurrencies as legal digital assets “protected under section 44 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended)”.

The lawyers, therefore, asked the court to validate the Investments and Securities Act 2007, which made SEC the apex regulatory body of the Nigerian capital market.

They also prayed the court to declare the CBN action as “ultra vires, unconstitutional, null and void” while also seeking a “perpetual injunction restraining the 1st defendant from regulating and/or further regulating virtual currencies/ cryptocurrencies in Nigeria.”