The Central Bank of Nigeria has ordered all banks to close accounts belonging to crypto exchanges or businesses transacting in cryptocurrencies in the country
Osato Avan-Nomayo / Cointelegraph :
Context & Ripple Effects
In February 2021 the Central Bank of Nigeria cut crypto businesses off at the banking layer, ordering every bank to close exchange and merchant accounts rather than regulate the sector directly. The move put Nigeria in step with a playbook India's RBI had already run three years earlier, banning financial institutions from serving crypto dealers.
The ban defined Nigerian crypto policy for nearly three years before the central bank reversed course and lifted it in December 2023, citing global trends toward regulation — even as pressure continued through other channels, from the SEC's order that Binance halt operations as unregistered to the reported blocking of major exchanges' websites by telecoms.
First-order effects
- Crypto exchanges and any business transacting in cryptocurrencies lose their Nigerian bank accounts immediately, forcing them to operate without local fiat rails.
- Commercial banks must audit and terminate these relationships or face the central bank's supervisory action.
Second-order effects
- Trading migrates to peer-to-peer and offshore channels outside the banking system, weakening the visibility the ban was meant to create.
- Other central banks weighing their own stance get a template: India's RBI had shown the same banking-access lever two years earlier, making prohibition-by-debanking a repeatable play.
Third-order effects
- If the arc holds — ban, informal market growth, then reversal — central-bank prohibitions function as delays rather than endpoints, with Nigeria's own December 2023 lift showing bans giving way to formal regulatory frameworks.
- Regulators learn that cutting banking access does not extinguish demand, shifting the policy debate from prohibition toward licensing and oversight of exchanges.
The trend: Central banks are discovering that banning crypto through banking access suppresses but does not stop usage, pushing them from prohibition toward regulated re-entry.