Kuda Bank has warned its customers that it will close accounts found to be engaged in the transaction of cryptocurrency.

The bank stated that it can’t facilitate cryptocurrency transactions because it violates the policy of the Central Bank of Nigeria which regulates all financial institutions in the country.

Kuda Bank’s statement follows multiple complaints on social media about several account cancellations.

Kuda Bank’s position on cryptocurrency

Kuda Bank was the first Nigerian bank to gain collaboration with Binance, a popular crypto exchange, and it was a big advocate of cryptocurrency at the time, according to a source. However, everything changed after the apex bank placed a ban on the transaction of cryptocurrency.

Following the CBN’s announcement, on February 12, 2021, Kuda Bank delivered a message to customers notifying them of its new cryptocurrency position.

The message read, “In the light of the recent letters and statements issued by the Central Bank of Nigeria concerning transactions relating to cryptocurrency, please note that Kuda Microfinance Bank is not allowed to and does not deal in, or facilitate the trading of, any form of cryptocurrency.

“Consequently, we strongly advise that you do not use your Kuda account for cryptocurrency-related activities so you don’t get into trouble with the law.”

Kuda reacts to claims of accounts closure 

Reacting to recent complaints, the bank has issued a statement to its customers reiterating its resolve to obey the rules and regulations of the CBN as it carries out its operations.

According to the statement obtained by Nairametrics, Kuda Bank informed customers that if it did not act against fraudulent acts, the bank would be considered to be breaking the law.

The message partly reads “Let’s be crystal clear: We are on your side. We are your bank. There should never be any doubt about this.

But as much as we are on your side, we are also a licensed financial institution and our banking license comes with regulations and rules that we must obey. 

If we disobey these regulations and rules, we will not be allowed to continue running a bank for you or anyone else. There will be no bank of the free if we break the law.

So when a Kuda customer uses their account in a way that breaks the law, we must do what the law demands. 

In some cases, this could be as simple as asking the customer to explain what they use their account for. This is part of a standard KYC (Know Your Customer) process for any financial institution.

In cases of clear fraud, the law demands that we report the customer to the appropriate authorities and close their account with us so that they won’t continue to defraud other people of their money with that account. 

Remember that it could be you being defrauded, and we must do everything in our power to prevent this from happening.

If we do not do what the law demands in these cases, we will also be considered to be breaking the law.

This is why, for example, we have advised everyone not to use their Kuda account for cryptocurrency transactions of any kind, otherwise we’ll be forced to close their account as demanded by regulations. As of today, licensed financial institutions like ours are prohibited from enabling cryptocurrency transactions and we are not allowed to ignore this prohibition. It is simply what the law demands.”

Another perspective

“Kuda bank does not close accounts for no cause,” a source inside Kuda Bank told Nairametrics. “The CBN policy must have been broken by the accounts that were cancelled.”

He also stated that if an account has been incorrectly closed, there is a way to reactivate it.

He admitted that cryptocurrency is profitable, stating, “the bank is losing money by not supporting cryptocurrencies, but we must obey the CBN guidelines.”