In a significant shift, the Central Bank of Nigeria (CBN) has lifted its longstanding ban on cryptocurrency trading within the country. This announcement, made on Friday, December 22nd, 2023, marks a major departure from the CBN’s initial stance of outright prohibition implemented in 2021.
This is according to a circular dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, and signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa.
The circular titled, ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’
The apex bank stated that current trends globally have shown the need for crypto regulation. It said, “The CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures.
“However, current trends globally have shown that there is need to regulate the include providers (V/ASPs) which activities of virtual assets service cryptocurrencies and crypto assets. Following this development, the Financial Action Task Force (FATF) in 2018 also updated its Recommendation 15 to require VASPs to be regulated to prevent misuse of virtual assets for ML/TF/PF Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognizes VASPs as part of the definition of a financial institution.”
The CBN’s previous stance, enacted in February 2021, prohibited banks and other financial institutions from facilitating cryptocurrency transactions. This move effectively crippled the burgeoning crypto market in Nigeria, a nation with a significant youth population and increasing tech adoption.
However, this latest development is likely to trigger a flurry of activity in the Nigerian crypto space. Investors, entrepreneurs, and regulators will all be scrambling to understand the implications of the new regulations and adapt their strategies accordingly.
In the coming weeks and months, it will be crucial to closely monitor the details of the regulatory framework and its implementation. Only then can a comprehensive analysis be made of the true impact of the CBN’s move on the future of crypto in Nigeria.
