After prohibiting transactions in cryptocurrencies across Nigeria on 5 February 2021, the Central Bank of Nigeria, CBN, has now reversed that ban and taken a positive posture towards digital assets, issuing new guidelines to financial institutions for crypto trading.
When the unpopular policy was put in place in February 2021 to address money laundering and terrorism financing, many Nigerian companies had to go under the radar, either relocating abroad or shutting down business completely. Nigeria’s burgeoning young and tech-savvy crypto population also suffered a huge setback.
The CBN lifted the ban last Friday, 22 December, saying global trends had shown a need to regulate activities of crypto companies in Nigeria, which it calls virtual asset service providers, VASPs.
“Current trends globally have shown that there is a need to regulate the activities of virtual assets service providers (VASPs) which include cryptocurrencies and crypto assets,” according to a memo directed to commercial banks by the CBN’s director of financial policy and regulation department, Haruna Mustapha.
The apex bank noted that the new directive supersedes the former directives on the same subject dated 12 January 2017 and 5 February 2021.
It said Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognises VASPs as part of the definition of a financial institution, hence, the need for the reversal of the restriction.
The latest development allows commercial banks to run bank accounts for Securities and Exchange Commission-licenced VASPs, provide them with designated settlement accounts, and act as channels for forex inflows and trade, while still restricting banks and other financial institutions from directly trading virtual currencies.
