‘Every medium of exchange is subject to fraud’ — Moghalu counters CBN on crypto trading

Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria (CBN), has faulted the apex bank’s decision to stop banks from dealing in digital currencies and facilitating payments.

Giving reasons for the directive, the apex bank had said: “Due to the fact that cryptocurrencies are largely speculative, anonymous and untraceable, they are increasingly being used for money laundering, terrorism financing and other criminal activities”.

However, Moghalu, in an interview with Arise News on Monday, said the ban on buying and selling cryptocurrencies based on increase in fraud and other criminal activities is not a very serious argument.

He said: “Cryptocurrencies have their risks and the central bank should be concerned. The argument that cryptocurrencies are used to perpetrate fraud is not a serious argument.

“People can use cryptocurrencies for wrong uses but every medium of exchange is subject to fraud and criminality.

“If you can manage the risk of fraud in paper money and other electronic platforms, why can’t you think of managing it with cryptocurrencies.

“I would have preferred some deep thinking about how to come up with a regulatory framework that restricts the use of cryptocurrency or subjects it to some surveillance that alerts the central bank if there are serious abuses that can affect financial system stability.

“CBN, especially in my time, did have a tendency for innovation ourselves, so I don’t see why there should be some sort of declaration of a third world war between the central bank and cryptocurrency.

“An outright ban on financial institutions from having accounts associated with cryptocurrency exchanges or cryptocurrency trading, seems to me… it wasn’t the best approach to the problem”.

Moghalu advised CBN to be imaginative and take a risk management approach on the cryptocurrency market in Nigeria.

He said CBN should create a central bank of digital currency like other countries such as China and Sweden, whereby central banks issue sovereign digital currency that is linked to their own fiat money.

“CBN should do some deep research about cryptocurrency exchanges in Nigeria since the reality is that many Nigerians are using it. If your country is one of the top 10 in the world, I don’t think it’s a wise approach to just ignore it or banish it.”