Reasonable and Understandable Guidelines
Nigerian fintech lawyer Senator Ihenyen acknowledges that the Central Bank of Nigeria’s (CBN) new guidelines, which prohibit cash withdrawals from virtual asset service providers’ (VASPs) bank accounts, may appear reasonable and understandable at first glance. He suggests that this prohibition aligns with the CBN’s goal of combating cash usage in criminal activities and reducing the costs associated with cash handling. Ihenyen also emphasizes the impact of cash transactions on monetary policy and the potential fraudulent leakages that crypto-to-fiat cash withdrawals can cause in the financial system as reasons why the CBN included this prohibition.
CBN Cashless Policy
However, Ihenyen points out that an outright elimination of cash withdrawals from VASPs’ accounts may contradict the CBN’s own cashless policy. The cashless policy sets withdrawal limits instead of imposing a complete prohibition. If those limits are exceeded, a cash handling fee is recommended. Ihenyen suggests that VASPs could be required to hold customer funds in a designated customer account with a Nigerian deposit money bank to effectively manage the cash withdrawal limits. He believes that ongoing stakeholder engagements between regulators, innovators, and users will benefit consumers and Nigeria as a whole.
Achieving Consumer Protection and Innovation
By implementing regulations and engaging with various stakeholders, the financial sector can minimize risks, protect consumers, and foster innovation. The CBN’s recent guidelines prohibiting cash withdrawals from VASPs’ accounts aim to address concerns like criminal financing and the high costs associated with cash use. However, it is important to strike a balance between regulation and supporting the growth of fintech. Collaborative efforts between regulators, innovators, and users can ensure that appropriate measures are in place while promoting a secure and vibrant digital economy. With ongoing discussions and cooperation, Nigeria can emerge as a leader in embracing financial innovation and safeguarding consumer interests.
Hot Take: Ensuring a Secure and Progressive Crypto Landscape
Nigerian fintech lawyer Senator Ihenyen’s analysis of the Central Bank of Nigeria’s guidelines highlights the rationale behind the prohibition of cash withdrawals from VASPs’ accounts. While the guidelines raise concerns about their alignment with the CBN’s cashless policy, open dialogues and stakeholder engagements can lead to constructive solutions that balance regulation and innovation. It is essential to consider the objectives of combatting criminal activities and strengthening the financial system while fostering an environment conducive to fintech growth. By working together, regulators, innovators, and users can ensure a secure and progressive crypto landscape in Nigeria, benefiting both consumers and the nation’s overall economy.
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