The Central Bank of Nigeria (CBN) has recently suspended the provision of the bank validation number (BVN) service to all fintech and third-party partners. The decision means non-banks entities include crypto startups â€œhave lost one of the most comprehensive means of identity verification in the country.â€
New Identification System
Before the latest decision, the CBN accepted the use of the BVN alongside any other acceptable identity documents for KYC purposes. According to the apex bank, this service helped to â€œcheck risk and determine whether or not there is an element of money laundering, fraud and other corruption-related activities.â€
However, as one local media report explains, the central bankâ€™s sudden decision may be linked to the Federal governmentâ€™s determination to change Nigeriaâ€™s identification system. The report says:
Nevertheless, the report still warns that the removal of the BVN service could potentially â€œincrease the cost of onboarding customers.â€
Following reports of the suspension of the BVN service, Bitcoin.com News sought the views of some players in Nigeriaâ€™s crypto industry. Most of the players agree the suspension is not specifically targeted at the crypto industry. However, some are adamant the move is just a continuation of CBN policies that seek to stifle innovation and to block young people from participating in the economy.
Nathaniel Luz, a cryptocurrency thought leader, characterizes the CBNâ€™s latest decision as a clash between â€œold and new money.â€ He adds that the suspension of the BVN service shows that the CBN continues to use the same playbook to frustrate the Nigerian youth. In a post on Facebook, Luz wrote:
An Attack on Fintechs
In the meantime, another crypto space leader, Chiagozie Iwu, a CEO of a local crypto exchange, expressed surprise at the CBNâ€™s decision to suspend the use of the BVN service for verification. He said while crypto and fintech start-ups have, with the aid of the BVN service, been trying to make the space (fintech and crypto space) cleaner, the suspension of the service removes the ability to do the KYC on users. Iwu offers his thoughts on why the CBN made the decision:
â€œIt is becoming very obvious that they just looking for every way of attacking fintechs (both crypto and non-crypto).â€
Iwu suggests that because some fintech start-ups like Flutterwave now handle â€œvolumes which banks can only dream ofâ€, the CBN is now coming to the aid of banks via the suspension of the BVN service.
Meanwhile, at the time of writing, the CBN had still not disclosed its reasons for the suspension of the BVN service. Bitcoin.com News will update readers once the CBN explains the reasons for the suspension.
What are your thoughts on the CBNâ€™s decision to suspend the BVN service? Tell us what you think in the comments section below.
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