IMF backs CBN, says cryptocurrencies may be used for illegal activities

The International Monetary Fund (IMF) has warned against cryptocurrency transactions, saying some of the virtual currencies are used for money laundering and drug trafficking.

The Central Bank of Nigeria recently directed banks and other financial institutions to close accounts of persons involved in cryptocurrency transactions.

Speaking with journalists on Wednesday, Ari Aisen, IMF resident representative for Nigeria, said many central banks all over the world have taken a similar stance on cryptocurrency.

“The issue with some of the cryptocurrencies is that perhaps some care should be taken about their activities. The use of cryptocurrencies is a concern,” he said.

“That is why some central banks, not only in Nigeria, have these concerns about what kind of the activities these cryptocurrencies are put and how best to monitor those activities.

“Some of them may be illegal activities and may be related to money laundering, even drugs or other illegal things. It is natural that the monetary authorities will be concerned about how best to supervise and increase their oversight regarding the use of cryptocurrencies.

“The CBN is thinking closely about its trade-offs and is trying to design the best policy in the interest of the payment system and the sustainability of the financial sector.”

In compliance to the apex bank’s directive, the Securities and Exchange Commission (SEC) issued a statement, stating that it would suspend the admittance  of all persons affected by the CBN’s circular on cryptocurrencies into its Regulatory Incubation Framework for Fintech Firms.

“For the purpose of admittance into the SEC Regulatory Incubation Framework, assessment of all persons (and products) affected by the CBN Circular of February 5, is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system,” it had said.

Countries such as China, Iran, Morocco have banned cryptocurrency trading.