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 “have lost one of the most comprehensive means of identity verification in the country.”
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 “check risk and determine whether or not there is an element of money laundering, fraud and other corruption-related activities.”
However, as one local media report explains, the central bank’s sudden decision may be linked to the Federal government’s determination to change Nigeria’s identification system. The report says:
Over the last few months, the Federal government has been changing the unique means of identification of all agencies, parastatal and industries to National Identification Numbers (NIN). Examples include UTME/ JAMB registration, voter registration, Banks and SIM cards.
Nevertheless, the report still warns that the removal of the BVN service could potentially “increase the cost of onboarding customers.”
Following reports of the suspension of the BVN service, Maximumhorrors.com News sought the views of some players in Nigeria’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 CBN’s latest decision as a clash between “old and new money.” 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:
There is a handwriting on the wall— the fact that most ‘traders’ on the Nigeria Stock Exchange (NSE) are over 50 years and there is no pipeline for young people flowing. Old men are trying to use every means possible to frustrate new money guys from economic independence. This is very specific, knowing that this is a decade where we expect a global shift/wealth transfer.
An Attack on Fintechs
In the meantime, another crypto space leader, Chiagozie Iwu, a CEO of a local crypto exchange, expressed surprise at the CBN’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:
“It is becoming very obvious that they just looking for every way of attacking fintechs (both crypto and non-crypto).”
Iwu suggests that because some fintech start-ups like Flutterwave now handle “volumes which banks can only dream of”, 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. Maximumhorrors.com News will update readers once the CBN explains the reasons for the suspension.
What are your thoughts on the CBN’s decision to suspend the BVN service? Tell us what you think in the comments section below.