Coinbase Says Client Assets Are 'Segregated and Secure' Following Proposed SEC Rule Change

Coinbase Says Client Assets Are 'Segregated and Secure' Following Proposed SEC Rule Change

Coinbase is confident that its Coinbase Custody Trust Co. (CCTC) will remain a qualified custodian even if new rules proposed by the SEC come into play, according to the company’s chief legal officer Paul Grewal.

Coinbase Custody Trust is a New York-based business that provides cold storage for third-party investors’ digital assets. The SEC on Wednesday published a rule-change proposal that seeks to enforce much stricter provisions governing where registered investment advisers can custody cryptocurrency on behalf of their investors, limiting such investments to what are known as “qualified custodians.”

These custodians must adhere to a stricter set of regulations, including keeping funds in a siloed account, unmixed with their own funds or those of other organizations.

Coinbase’s Grewal told Decrypt that his firm supports the SEC’s proposal and fully agrees that “investors deserve to feel confident their assets are safe.” Grewal added that its custodial clients’ assets “are segregated and secured.”

“We commend the SEC for recognizing Coinbase Custody Trust Co. (CCTC) is a qualified custodian, and after today’s SEC proposed rulemaking, we are confident that it will remain a qualified custodian,” said Grewal.

Crypto industry cautious over custody

SEC Chair Gary Gensler didn’t mince words when it came to criticizing the practices of some crypto custodians.

In the proposal, Gensler said that “though some crypto trading and lending platforms may claim to custody investors’ crypto, that does not mean they are qualified custodians.”

Gensler said that certain platforms have commingled investor assets with both their own or other investors in the past, leaving these “investors in line at the bankruptcy court” when such platforms have gone bankrupt.

In the wake of FTX’s high-profile collapse last November, which saw the crypto exchange mix user funds with its sister trading firm Alameda Research, investors have been on high alert regarding how trading platforms custody their assets.

One such development to cool investors’ nerves has been the rise of reserve reports, with exchanges like Binance, KuCoin, ByBit, and others providing users with attestations as to how they manage their reserves.

Coinbase is confident that its Coinbase Custody Trust Co. (CCTC) will remain a qualified custodian even if new rules proposed by the SEC come into play, according to the company’s chief legal officer Paul Grewal.

Coinbase Custody Trust is a New York-based business that provides cold storage for third-party investors’ digital assets. The SEC on Wednesday published a rule-change proposal that seeks to enforce much stricter provisions governing where registered investment advisers can custody cryptocurrency on behalf of their investors, limiting such investments to what are known as “qualified custodians.”

NBA Top Shot Will Let Users Buy NFTs via Apple, and Android Mobile Apps

NBA Top Shot Will Let Users Buy NFTs via Apple, and Android Mobile Apps

NBA Top Shot, the officially licensed basketball NFT platform that has generated more than $1 billion in sales to date, is headed to mobile with the launch of smartphone apps through Apple’s iOS App Store and Google’s Android Play Store.

For NBA Top Shot users, the native apps aim to provide a smoother way to access and buy digital collectibles on the go. But for creator Dapper Labs, which developed the Flow blockchain and also runs platforms like NFL All Day and UFC Strike, it’s the first step in the company’s transformation into a mobile-first Web3 company.

“The NBA Top Shot app will really be the start of our move to be a mobile-first company,” Dapper Labs Senior VP of Sports Partnerships Jennifer van Dijk told Decrypt. She added that the move will let Dapper “lead the way in what mobile looks like in Web3, and continue our path of wanting to bring everybody to Web3.

nftPromotional artwork showing the NBA Top Shot mobile app. Image: Dapper Labs

Dapper Labs will initially release a limited version of the app. At first, users will be able to view their own collection of NBA Top Shot NFTs, see platform activity, be notified of drops, and purchase a starter pack of NFT moments. More features will be added over time.

The ability to buy NFTs through a mobile app is the new twist here. Web3 startups and NFT marketplaces have had to restrict the ability to transact NFT assets via mobile apps due to Apple and Google expecting a cut of sales.

That wrinkle potentially makes primary sales more expensive for mobile users, but really throws a wrench into the idea of secondary market sales between users. Where does Apple’s 30% fee come from in that case? It’s a hurdle that Web3 startups have been wrestling with over the past months since the tech giant clarified its stance towards NFT sales and uses.

Van Dijk said that Dapper is bearing this in mind while developing and expanding the Top Shot app, and working closely with not only its sports league partners but also Apple and Google to try and find the best path forward. When users buy an NBA Top Shot starter pack through one of the mobile apps, the price shown will include any fee considerations on Dapper’s part.

“When we present a price, that will include everything that would be taken out or managed by us on the back end, and the consumer will have that price,” she explained. “We’re committed also to keeping prices reasonable for fans and making them accessible.”

She pointed to last week’s sold-out drop of 100,000 Top Shot starter packs designed around LeBron James’ feat of breaking the NBA’s all-time scoring record. Those packs, sold through the web interface, cost $9 apiece.

“We’re going to continue in that trend, as well, on the starter packs,” van Dijk added. “Maybe not $9, exactly, but reasonable and affordable.”

Mobile evolution?

Eventually, the goal is to expand the Top Shot mobile apps to enable peer-to-peer marketplace trades between users—despite the challenges given the fees that Apple and Google charge for in-app transactions. Van Dijk said that Apple and Google appear “very interested in exploring this space with the right partners and experiences.”

Already, NBA Top Shot sees as much as 75% of its traffic from mobile web, Van Dijk said—but trying to buy and handle NFTs via a mobile browser can be a challenge.

Dapper Labs was one of the brightest stars in the early days of the NFT boom in 2021 as Top Shot permeated the mainstream, but it has faced more recent challenges amid falling NFT sales. In November, the Canadian firm laid off about 22% of its team citing market conditions as the broader NFT and cryptocurrency markets struggled.

Embracing mobile in this way signals a new path forward as the company finds its place in the ever-changing Web3 industry. The Top Shot app is the first step towards “bridging that divide” between clunky Web3 experiences and a potentially much larger audience of smartphone-wielding users that don’t have easy access to NFT experiences.

She added that Dapper’s “hope for the future” is that the company and its partners can “over time, come together and figure out what evolves from here.” Part of realizing that ambition, she suggested, is playing by the current mobile app marketplace rules and then trying to nudge the regulations toward a more Web3-friendly place.

“There are no easy answers,” van Dijk said. “But I think that is also the ability for us to be good partners together, and come to those things together—instead of in any way trying to go around the rules or things like that. [We’ll] change together, evolve together, and I think we’ll get to a pretty good place.

Stanford Alumni Revealed as Co-Signers of FTX Co-Founder’s $250M Bond

Stanford Alumni Revealed as Co-Signers of FTX Co-Founder’s $250M Bond
Stanford Alumni Revealed as Co-Signers of FTX Co-Founder's $250M Bond

According to the latest court documents in the fraud case involving former FTX CEO Sam Bankman-Fried in Manhattan, the New York judge presiding over the case unsealed the co-signers of Bankman-Fried’s bond on Wednesday. The names of the two bail bond co-signers that were previously redacted from court documents are Stanford University alumni Larry Kramer and Andreas Paepcke.

Details Emerge on SBF’s Bail Bond Co-Signers

Sam Bankman-Fried (SBF), a co-founder of FTX, faces eight counts of financial misconduct for allegedly mishandling customer funds. He is currently out on bail and is being monitored by an ankle bracelet, with his trial scheduled for Oct. 3, 2023. SBF’s $250 million bond agreement was secured by his parents’ Stanford faculty home, and two co-signers backed the agreement. However, their names were previously unknown because lawyers argued that they should remain redacted for privacy reasons.

Stanford Alumni Revealed as Co-Signers of FTX Co-Founder's $250M Bond
The two co-signers of SBF’s $250M bail bond were both members of Stanford University. Co-signer Andreas Paepcke is pictured on the left and co-signer Larry Kramer is pictured on the right.

On Wednesday, the New York judge unsealed the previously redacted names of the two co-signers, revealing that they were prominent members of Stanford University. One co-signer was Larry Kramer, a former dean of Stanford Law School from 2005 to 2012. The other co-signer was Andreas Paepcke, a senior research scientist in computer science at Stanford University. Kramer is the president of the left-leaning Hewlett Foundation, which aims to bolster ‘effective philanthropy.’ He has described SBF’s parents as “the truest of friends.” In a statement sent to multiple media publications, Kramer said:

Joe Bankman and Barbara Fried have been close friends of my wife and I since the mid-1990s. During the past two years, while my family faced a harrowing battle with cancer, they have been the truest of friends — bringing food, providing moral support, and frequently stepping in at moment’s notice to help. In turn, we have sought to support them as they face their own crisis.

According to reports, several news outlets have attempted to get a comment from computer science researcher Andreas Paepcke, but he has not responded to requests. According to his bio, Paepcke is interested in ‘interfaces and systems’ and leverages ‘data analytics to create tools that benefit these online efforts.’ Some people on Twitter also commented on the resemblance between SBF and Paepcke. SBF told journalist Tiffany Fong that neither of the bond guarantors “received payments from FTX or Alameda.”

What are your thoughts on the revelation of the co-signers identities in Sam Bankman-Fried’s bail agreement? Share your thoughts in the comments below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. cryptoflings.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned in this article.

FTX Insiders Served Subpoenas Over Fallen Crypto Exchange's Financial Dealings

FTX Insiders Served Subpoenas Over Fallen Crypto Exchange's Financial Dealings
ftx

FTX bankruptcy proceedings have taken another twist after the company’s insiders were all hit with fresh subpoenas.

The bankruptcy court has ordered Sam Bankman-Fried, former Alameda CEO Caroline Ellison, former FTX CTO Gary Wang, and former co-CEO of FTX Digital Markets Nishad Singh to produce a range of documents related to the exchange’s activities.

Bankman-Fried’s father Joseph Bankman and mother Barbara Fried are among those subpoenaed too, according to court documents filed Tuesday in the U.S. Bankruptcy Court for the District of Delaware.

FTX’s legal team asked for permission to serve subpoenas to the group on January 25, saying that “key questions remain… concerning numerous aspects of the Debtors’ finances and transactions.”

The subpoenas demand a considerable amount of information regarding the now-defunct crypto exchange and its affiliated companies, including “any payments, digital assets, real estate, fiat currency, or other assets received from any of the entities in the FTX Group,” or from any executive or employee of any entity in the FTX Group.

All but Bankman-Fried must supply the requested information by February 16. The disgraced crypto founder has until February 17 to provide the relevant documents.

FTX suspicious activity information demanded

Both Bankman-Fried and Ellison have been specifically asked to provide information about all communications sent or received from personal email accounts or instant messaging platforms concerning the FTX Group or assets of the FTX Group or Alameda.

They are also asked to produce information about Binance’s move to acquire FTX last November, which eventually fell through after CEO Changpeng Zhao stated that FTX’s liquidity problems were “beyond our control or ability to help.”

FTX’s legal team also wants to see documents related to “any payments or other transfers of value to any political campaigns, politicians, political action committees, political parties,” and other affiliated individuals.

The court has asked SBF’s father to produce information about “contemplated, potential, or actual purchases of real estate,” including any real estate in the Bahamas.

FTX Digital Markets’ Singh has been specifically asked to produce documents related to FTX Group’s risk management and automated liquidation systems, processes, and policies, including all documents that would shed light on how those applied or did not apply to Alameda.

SBF, who faces eight criminal charges, including wire fraud, money laundering, and misappropriation of customer funds, last month pleaded not guilty to the alleged crimes.

Former Alameda CEO Ellison and FTX co-founder Wang, on the other hand, have both admitted to fraud and are cooperating with federal prosecutors.

FTX Bankruptcy Judge Allows Company to Subpoena Founder Bankman-Fried, Other ‘Insiders’

FTX Bankruptcy Judge Allows Company to Subpoena Founder Bankman-Fried, Other ‘Insiders’

FTX’s new leadership asked for the subpoenas last month.

By Nikhilesh De

AccessTimeIconFeb 8, 2023 at 10:06 p.m.

Updated Feb 8, 2023, at 10:31 p.m.

FTX Founder Sam Bankman-Fried being extradited back to the United States from the Bahamas (Royal Bahamas Police Force)
FTX founder Sam Bankman-Fried being extradited to the United States from the Bahamas (Royal Bahamas Police Force)

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U.S. Judge John Dorsey ordered that FTX’s new leadership and its official creditor committee can subpoena the crypto exchange’s founders and former executives, including Sam Bankman-Fried.

Gary Wang, Caroline Ellison, Nishad Singh, Constance Wang, and Bankman-Fried’s family – mother Barbara Fried, father Joseph Bankman and brother Gabriel Bankman-Fried – can also be subpoenaed, the order said. FTX’s Official Committee of Unsecured Creditors and its leadership moved to subpoena the individuals last month.

FTX is looking for information about who may have received funds sent from the company, which may have included misappropriated customer funds.

“Certain insiders are currently cooperating with the Debtors to provide important information. But others are not, and thus authorization to issue subpoenas to those with the missing information is critical to the Debtors’ and Committee’s recovery efforts,” FTX wrote at the time.

Judge Dorsey, of the U.S. Bankruptcy Court in Delaware, signed off on the order Wednesday, noting that FTX could come back with further requests.

“The Movants are authorized under Bankruptcy Rules 2004 and 9016 to issue subpoenas to any or all of the Insiders for the production of documents, electronically stored information, or tangible things, including those responsive to the Requests,” he wrote.

“The Movants are authorized under Bankruptcy Rules 2004 and 9016 to issue subpoenas to any or all of the Insiders for the production of documents, electronically stored information, or tangible things, including those responsive to the Requests,” he wrote.

The scope of the information demands can still be tweaked if an independent examiner is appointed, the order said, referring to concerns from the Department of Justice that there could be duplication of effort.

The judge also signed a second order allowing FTX to subpoena third parties for information that may be tied to a hack of the exchange from the day it filed for bankruptcy protection.

Jack Schickler contributed reporting.

Read more about

regulationsFTXSam Bankman-FriedFTX collapse

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Sam Bankman-Fried Barred From Contacting FTX Employees Via Encrypted Messages

Sam Bankman-Fried Barred From Contacting FTX Employees Via Encrypted Messages
Sam Bankman-Fried Barred From Contacting FTX Employees Via Encrypted Messages

Sam Bankman-Fried is no longer allowed to contact FTX and Alameda employees or use encrypted communications, U.S. District Judge Lewis Kaplan ordered Wednesday.

The restriction was put into place following claims made Friday that the disgraced crypto mogul had contacted a potential witness earlier this month via the encrypted messaging platform Signal, seeking to establish a more favorable relationship.

The court plans to let both legal teams make arguments for or against the measure—originally put forth as a bail modification—on Feb. 7, but Judge Kaplan found it was “clearly and convincingly sufficient” to impose the restrictions until a further determination could be made, a recent filing states.

 

Federal prosecutors had said the conduct of Bankman-Fried may amount to “witness tampering” when he reached out to “the current General Counsel of FTX US”—a person with close knowledge of his conduct leading up to the collapse of FTX in November of last year but listed in a recent filing only as “Witness-1.”

“I would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other,” U.S. prosecutors alleged Bankman-Fried wrote.

FTX, founded by Bankman-Fried, filed for bankruptcy in November following a run on the exchange that was triggered by a steep drop in the price of the exchange’s native cryptocurrency FTT. The run on FTX revealed it did not have one-to-one reserves of customer assets, could not honor withdrawals, and forced it to file for bankruptcy.

Bankman-Fried was then arrested and charged with eight financial crimes in connection with the collapse of the exchange. On January 3, he pleaded not guilty to the charges and now awaits a trial scheduled for October. It’s alleged he misappropriated billions of dollars worth of customer funds to donate to political campaigns, purchase private real estate, and fuel trades at his trading firm Alameda Research.

With regard to the allegations of witness tampering, Bankman-Fried did not contest the fact that he reached out to an employee of FTX, but his legal team argued the former CEO’s efforts were “merely an innocuous attempt to offer assistance in FTX’s bankruptcy process and do not reflect misconduct.”

But Judge Kaplan didn’t view Bankman-Fried’s recent actions in a “benign way,” stating in a court order that “it appears to have been an effort to have both the defendant and Witness-1 sing out of the same hymn book.”

The attempt to speak with “Wittness-1” using Signal took place on January 15 and was accompanied by an email, prosecutors said. While still unnamed, Ryne Miller is FTX US’s current counsel. And the FTX’s founder’s counsel did not dispute that “since his release, [Bankman-Fried] has contacted other current and former FTX employees.”

As part of their basis for restricting his use of encrypted or “ephemeral” communications–including messages or calls—federal prosecutors said Bankman-Fried had told former CEO of Alameda Caroline Ellison he was aware “that many legal cases turn on documentation.”

One element of newly enforced restrictions specifically states Bankman-Fried is prohibited from contacting current and former employees of FTX or Alameda without a lawyer present unless given permission by the government, and it does not apply to immediate family members like Joseph Bankman–Bankman-Fried’s father who was a paid employee of FTX.

When the FTX founder’s legal team countered the bail amendment put forth by federal prosecutors, they urged Judge Kaplan to reverse a previous change made to the agreement that let Bankman-Fried stay at his parents’ home in Palo Alto, California, as he awaits his criminal trial.

The prior modification barred Bankman-Fried from accessing funds or digital assets belonging to FTX and Alameda, a change put into place on the day of his arraignment, where he pleaded not guilty to a myriad of financial crimes, including federal wire fraud, securities fraud, and money laundering.

Additionally, Bankman-Fried’s counsel called the new bail modification “overbroad” and “unworkable,” arguing it would restrict the FTX founder’s ability to speak with his therapist, necessitating a lawyer be present, as an example.

 

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Judge Rules FTX Identities of 2 Parties Who Backed Sam Bankman-Fried’s $250M Bond Can Be Revealed

Judge Rules FTX Identities of 2 Parties Who Backed Sam Bankman-Fried’s $250M Bond Can Be Revealed

A number of media companies filed to get the court to release the names of the people who co-signed Bankman-Fried’s $250 million bail bond.

By Nelson Wang

AccessTimeIconJan 31, 2023 at 4:58 a.m.

Updated Feb 1, 2023, at 1:35 a.m.

ftx

U.S. District Judge Lewis Kaplan ruled on Monday that the identities of the two non-parental parties who co-signed Sam Bankman-Fried’s $250 million bond can be made public. CoinDesk Global Policy and Regulation Managing Editor Nikhilesh De discusses the decision and what to expect from FTX’s future bankruptcy proceedings.

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CORRECTION (Jan. 31, 13:03 UTC): Corrects dollar amount to millions in the headline. An earlier version said billion.

U.S. District Judge Lewis Kaplan ruled on Monday that the names of the two currently unidentified people who co-signed Sam Bankman-Fried’s $250 million bail bond can be made public.

It’s already known that the FTX founder’s parents also co-signed, but the other names were kept private.

The New York judge overseeing Bankman-Fried’s criminal trial ruled in favor of four separate petitions by a number of news organizations seeking the names of these individuals, who signed onto the bond earlier this month. The ruling is stayed pending a possible appeal until at least Feb. 7.

A slew of media companies, including the Wall Street Journal, Bloomberg, and CoinDesk, had filed suit to get the court to release the identities of the two people, saying that “the public’s interest in this matter cannot be overstated.”

Bankman-Fried’s lawyers had argued the possibility of physical threats to the parties were reasons to keep their identities private.

Read more about

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Coinbase Exec Says Institutional Investors Still Into Crypto Post-FTX

Coinbase Exec Says Institutional Investors Still Into Crypto Post-FTX

David Duong, head of institutional research at the exchange, says the collapse of Sam Bankman Fried’s platform didn’t lead to a pullback.

By Fran Velasquez

coinbase

AccessTimeIconJan 30, 2023 at 11:52 p.m.

Updated Jan 31, 2023 at 2:12 a.m.

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Institutional investors appear to have a steadfast interest in crypto, David Duong, head of institutional research at crypto exchange Coinbase, told CoinDesk TV’s “First Mover” on Monday.

“The secular trend for institutional adoption hasn’t changed … it’s still here,” Duong said about whether the implosion of the FTX crypto exchange founded by Sam Bankman-Fried soured investor interest.

FTX and Alameda Research, an affiliated hedge fund, collapsed in November after a CoinDesk report revealed that Alameda was largely being propped up by FTT, a digital token that FTX created out of thin air.

Duong said even in the midst of the FTX debacle that came on top of the crypto winter, institutional investors have recognized that “these are cyclical developments.”

Investors “are still here,” and are prepping for the next cycle by looking to “lay the foundation necessary to be able to trade,” he said.

Read more: FTX Creditor List Features Netflix, Binance, Wall Street Journal

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CoinbaseInstitutional AdoptionCoinDesk TVDavid duongCrypto

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Are NFTs Back? OpenSea Sales Rise in Consecutive Months for First Time in a Year

Are NFTs Back? OpenSea Sales Rise in Consecutive Months for First Time in a Year
NFT Ethereum

Is the crypto bear market coming to an end? Cryptocurrency prices are on the rise lately, and there are now growing signs that the NFT space is rebounding as well. The latest: OpenSea, the leading marketplace, has notched back-to-back Ethereum NFT monthly sales increases for the first time in a year, with January sales volume already topping December’s tally with a week left to go.

According to public blockchain data available on the analytics platform Dune, OpenSea has processed over $320 million worth of Ethereum NFT trades so far in January, already beating December’s tally of about $283.5 million. And December was the first time since April 2022 that OpenSea had posted any kind of sales increase, climbing from $253 million worth in November.

The rising value of Ethereum has something to do with it. Ethereum is up 33% over the past 30 days to a current price of $1,620, per data from CoinGecko. But even when measured in ETH, OpenSea’s January sales just inched past the December tally with over 228,000 ETH this month compared to 227,000 ETH in the previous period. In November, OpenSea had almost 191,000 ETH worth of Ethereum NFT sales.

Even so, while OpenSea’s recent rise is a positive signal for the industry after months of declining sales, the figures reinforce how significantly the market has deteriorated over the past year. In January 2022, OpenSea marked its best-ever month with $4.86 billion worth of Ethereum NFT sales.

OpenSea had five straight months of at least $2 billion worth of NFT trading volume each to start off 2022 but saw volatile up and down swings during that span. The last time the marketplace had two straight months of sales volume growth (measured in USD) was between December 2021 and January 2022.

Up NFT only?

The OpenSea streak isn’t the only recent data point that suggests signs of life for the NFT space. Prices are up for top collections, for example, with the cheapest-listed Bored Ape Yacht Club NFT jumping from $84,500 worth of ETH to nearly $108,000 over the past 30 days, per NFT Price Floor. CryptoPunks jumped from $76,500 worth of ETH to $108,000 during the same span.

Over the past 30 days, Bored Ape sales are up 45% over the previous period, per data from CryptoSlam, while Azuki NFTs have risen 89% and Art Blocks sales are up 62%.

 

The rise in NFT trading volume doesn’t appear to be restricted to OpenSea, either. Broadly, CryptoSlam shows a 33% rise in Ethereum NFT sales volume during that span, and a sizable 95% uptick in Solana NFT sales.

Previously, Decrypt reported that overall NFT market organic sales volume rose slightly in December 2022 compared to the previous month, per data from DappRadar, up from $662 million to $684 million.

Last week’s launch of the Sewer Pass NFT for Bored Ape Yacht Club members has helped fuel secondary market trading, with over $35 million worth of secondary trades thus far. OpenSea and X2Y2 appear to have handled the majority of those trades, as Yuga Labs blocked platforms (like Blur and LooksRare) that don’t fully enforce creator royalties.

The Bored Ape Yacht Club and associated collections are driving NFT trading volume lately, with pseudonymous Proof Director of Research Punk9059 pointing to Yuga’s projects encompassing about half of all Ethereum NFT trading volume over the past week. But the Apes were prominent drivers of early-year activity in 2022, as well, so that’s no major shift.

It’s unclear if these recent signals will ultimately coalesce into a sustained NFT market rebound, and there’s no doubt that the space has lost considerable momentum over the last year. But amid several months of declining activity, any upward movement is sure to be seen as good news by traders and builders in the space.

Nigerian Banks Still Distributing Old Naira Banknotes as Demonetization Date Approaches

Nigerian Banks Still Distributing Old Naira Banknotes as Demonetization Date Approaches
Nigerian Banks Still Distributing

With just a few days left before old Nigerian Banks Still Distributing banknotes are removed from circulation, some banks have accused the Central Bank of Nigeria of failing to distribute enough new banknotes. Despite growing pressure for it to extend the period for returning the old notes, the central bank insists the Jan. 31 deadline still stands.

Less Than 40% of ATMs Are Dispensing New Banknotes

As the Central Bank of Nigeria (CBN)’s Jan Nigerian Banks Still Distributing. 31 deadlines for returning the old naira banknotes approach, banks in several Nigerian states are still distributing the soon-to-be demonetized banknotes, a report has said. In addition, fewer automated teller machines (ATMs) — less than 40% according to an investigation by the Guardian — were reportedly dispensing new banknotes.

According to the Guardian report, some bank insiders are adamant that the shortages are caused by the CBN, which has not distributed enough new banknotes. One unnamed banker from Lagos claimed that their branch got “just N1.5m new notes” in the previous week and had no new stock of the redesigned naira at the time of writing.

The banker, however, suggested that the CBN planned to do a massive rollout of the new banknotes in the last week of January. The banker said:

The deadline is fast approaching, but we are not getting the expected quantity. We are suspecting that they will roll it out massively next week because there are no indications that the deadline will be extended.

Another banker from Nigeria’s Ogun state said while the CBN has refused to extend the current deadline the increased anxiety suggests that “a massive rollout of the money” should have been done by now.

CBN Refuses to Bow to Pressure

The fears that many Nigerians will lose out when the old naira banknotes are phased out has prompted some politicians to call for an extension of the deadline. However, the CBN has so far refused to bow to pressure and has insisted that the deadline still stands.

In the past, the central bank has dismissed claims that the decision to demonetize the old banknotes is aimed at punishing certain groups. Instead, the CBN insists that the exercise is designed to help it reduce expenditure on cash management as well as to weed out counterfeit banknotes.

Meanwhile, some Nigerian commentators have suggested that the CBN may be deliberately injecting inadequate banknotes as part of an attempt to force residents to switch to digital alternatives including its central bank digital currency (CBDC). Such speculation has in turn prompted the Nigeria Governors’ Forum (NGF) to issue a statement cautioning the CBN.

In the statement, the governors reportedly said that while they are not against the currency redesign policy, the central bank should “consider the peculiarities of states especially as they pertained to financial inclusion and under-served locations.”

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Nigerian Banks Still Distributing

Terence Zimwara

Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.

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