Cryptocurrency operations revived in Nigeria: Central bank lifts ban

adminDecember 25, 2023

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In its most recent circular, the Central Bank of Nigeria (CBN) announced the lifting of the ban on cryptocurrency trading. The decision was influenced by the need to regulate virtual asset service providers (VASPs), taking into account global trends, as highlighted by the bank. The CBN’s move is a reversal of its previous stance in February 2021, which prohibited banks and other financial institutions from engaging in or facilitating cryptocurrency asset trading. The bank’s initial ban was rooted in concerns about money laundering and terrorist financing risks.

Embracing Digital Transformation: Nigeria Adopts Regulatory Framework for Cryptocurrency Trading

Nigeria’s Securities and Exchange Commission (SEC) announced regulations for digital assets in May last year, further emphasizing the country’s transition to a more regulated cryptocurrency environment. This move by the SEC was seen as an effort to strike a balance between outright banning and uncontrolled use of cryptocurrency assets. Nigeria, known for its large population and technological proficiency, has seen a significant increase in cryptocurrency adoption, especially among young people. For example, peer-to-peer trading on cryptocurrency exchanges is becoming increasingly popular as a means of bypassing traditional financial channels.

In a circular dated December 22, the CBN outlined detailed guidelines for banks and financial institutions (FIs) regarding the processing of cryptocurrency transactions. The guidelines specify procedures for opening accounts, providing designated payment accounts and services, and facilitating foreign exchange inflows and transactions for businesses involved in trading cryptocurrency assets. However, the CBN maintains restrictions on banks, prohibiting them from trading, holding or dealing directly with cryptocurrencies.

“From the inception of this Regulation, Fl shall not permit any person or entity to open or operate an account for conducting virtual/digital asset business unless such account is designated for that purpose and is opened in accordance with the requirements of this Regulation . guideline”

To engage in cryptocurrency business, VASPs must obtain a license from the Nigerian SEC. CBN regulations prohibit financial institutions from opening or allowing the operation of accounts for virtual asset or digital asset business unless such accounts are specifically designated for that purpose and comply with the newly enacted guidelines.

This new approach to cryptocurrencies in Nigeria reflects significant changes in the country’s financial landscape. According to a September report from New York-based blockchain research firm Chainalytic, Nigeria’s cryptocurrency trading volume increased 9% year-on-year, reaching $56.7 billion from July 2022 to June 2023. I did. This growth highlights the country’s dynamic and evolving relationship with Nigeria. Digital currency.