Within a period of roughly 13years from its advent, Crypto currency has gained wide recognition as a Digital Asset and has attracted interesting, albeit, different and conflicting reactions from Economists, Financial Market Analysts, Investors and Governments alike.
There have also been concerns as to how real and sustainable the development of this digital asset is and the hope it hoards for the future of Fin-tech globally.
Prescriptively, various Countries in their own spaces have taken different positions with respect to the acceptability of crypto within their territories; each reflecting the monetary policies of the Country, the feared economic impact, the volatile nature of the digital asset amongst others.
The reactions by States can be roughly grouped under the following categories; (i) States that have legalized crypto, (ii) States that are indifferent about it, (iii) States that have regulated it, (iv) States with partial prohibition and (v) States with absolute prohibition.El Salvador through her Bitcoin law became the first to allow Bitcoin as a legal tender. Other States like Uzbekistan and Ukraine(following its invasion by Russia) have also legalized crypto.
States that are indifferent include Belgium, Spain, Italy Cyprus and South Africa and the attitude of their respective Governments is to merely warn the citizens against the risk involved in the use of crypto while reiterating the non-acceptance of same as legal tender.
Some of these States consider regulation of crypto assets as unripe and unnecessary; being a new technology which would need to be well looked into.
Many also do not fail to promise a future action while allowing a free deal in crypto without any regulatory or tax hitch going on in their territories.
In places like U.S and Israel, crypto is allowed with a measure of regulatory and tax interventions. The assets are treated as barter items, commodities, property or funds whose profits are accordingly taxable. Dealing in crypto is legal in these jurisdictions for both individuals and corporations subject to requisite registrations, licenses, approvals and tax payment.
Whereas, in some other states like Nepal, China, Bangladesh, Bolivia, Egypt, etc., there is a complete prohibition of all dealings in crypto through executive orders, legislative or regulatory interventions. The implication is that in such Countries individuals could get arrested and prosecuted for holding crypto assets in these jurisdictions.
States like Jordan, Saudi Arabia and UAE permit holding, trading, mining and other crypto dealings by individuals and other corporations.
In the case of Nigeria, there is no law prohibiting the holding, trading, mining or the use of crypto whatsoever. However, the CBN circular of February, 2021 prohibits banks and financial institutions from trading in or maintaining an account used for the purpose of trading crypto. There have been several arrests by the Nigerian police predicated on the above stated CBN circular of February, 2021. Aside that these arrests are largely for personal gains, it is actually unlawful.
It is important to emphasis that in Nigeria, nothing is a crime except that which is stipulated in a written Statute with punishment for same clearly defined, the case of AOKO v. FAGBEMI (1961) 1 ALL NLR 400 is instructive on this point.
The CBN Circular of February, 2021 is not an Act of the National Assembly but a policy document of the Regulatory Bank directed at Banks and other Financial Institutions. It is at best a subsidiary piece of legislation made by the CBN in its supervisory and regulatory powers pursuant to the CBN Act.
There is no law in Nigeria yet that makes it illegal to trade in or deal in crypto currency. Accordingly, it is safe to conclude that the arrest of persons on allegation of dealing in crypto without more is illegal and a breach of fundamental rights as enshrined in Section 36 of the Nigerian Constitution for which redress could be sought from a Court of competent jurisdiction. The above reasoning has also been given judicial approval in the case of CBN Governor V Rise West Technologies Ltd & 5 Ors, Suit No: FHC/ABJ/CS/822/2021.
It follows therefore that arrest of a person can only be upon a reasonable suspicion that an offence has been or is being committed. Since merely holding or dealing in Crypto without more does not qualify as an offence in any written law in Nigeria, any arrest is accordingly unreasonable and unlawful.
Article by:
Oluwagbemiga Alana ,
Associate, Royal Heritage Solicitors