The Central Bank of Nigeria (CBN), has officially lifted the ban on cryptocurrency transactions within the country.
The apex bank has directed commercial banks to abandon their previous stance on crypto transactions, as outlined in a circular titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’
Dated December 22, 2023, and bearing reference number FPR/DIR/PUB/CIR/002/003, the circular, signed by the CBN’s Director of Financial Policy and Regulation Department, Haruna Mustafa, outlines the rationale behind this decision.
The CBN had initially imposed restrictions on banks and financial institutions in February 2021, citing concerns related to money laundering, terrorism financing risks, and the absence of regulations and consumer protection measures in cryptocurrency operations.
The recent circular acknowledges global trends emphasizing the need to regulate the activities of Virtual Asset Service Providers (VASPs), including cryptocurrencies and crypto assets.
The Financial Action Task Force (FATF) updated its Recommendation 15 in 2018, calling for the regulation of VASPs to prevent the misuse of virtual assets for money laundering, terrorism financing, and proliferation financing.
The circular also highlights the legislative landscape, noting that Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022, recognizes VASPs as part of the definition of a financial institution.
Furthermore, the Securities and Exchange Commission issued rules in May 2022, providing a regulatory framework for the issuance, offering, and custody of digital assets and VASPs in Nigeria.
In light of these developments, the CBN has issued guidelines to provide clarity for financial institutions under its regulatory purview regarding their banking relationships with VASPs in Nigeria.
This marks a pivotal moment in the evolving landscape of cryptocurrency regulation in the country.
