In its most recent circular, Nigeria’s central bank said that it has lifted the prohibition on cryptocurrency transactions, citing the need to regulate these activities due to global trends.
Citing concerns about money laundering and the funding of terrorism, the Central Bank of Nigeria (CBN) forbade banks and other financial institutions from engaging in or assisting with transactions involving cryptocurrency assets in February 2021.
Following this, Nigeria’s Securities and Exchange Commission (SEC) released regulations for digital assets in May of last year, indicating that the most populous nation in Africa was attempting to strike a compromise between outright prohibiting crypto assets and their uncontrolled use.
The CBN stated in a circular dated December 22 that global trends now indicate the necessity of regulating the operations of virtual asset service providers (VASPs), which include cryptocurrency and crypto assets.
The most recent recommendations specify how financial institutions, including banks, should open accounts, offer services related to designated settlement accounts and settlements, and serve as conduits for trade and FX inflows for businesses that deal in cryptocurrency assets.
For VASPs to operate in the cryptocurrency industry, they would require a license from the Nigerian SEC.
“From the commencement of these Regulations, Fl shall not open or permit the operation of any account by any person or entity to conduct the business of virtual or digital assets unless that account is designated for that purpose and opened in line with the requirement of these Guidelines,” according to the CBN.
However, the CBN stated that banks were still not permitted to possess, trade, or interact with cryptocurrencies.
Nigeria’s youthful, tech-savvy populace has embraced cryptocurrencies with gusto, utilizing peer-to-peer trading provided by crypto exchanges to circumvent the banking industry, for instance.
According to a September report by the New York-based blockchain research firm Chainalysis, the number of cryptocurrency transactions in Nigeria increased by 9% annually to $56.7 billion between July 2022 and June 2023.
