THE Central Bank of Nigeria (CBN) has lifted the ban on cryptocurrency transactions in the country.
This is contained in a circular titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS)’ and dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003.
According to the circular signed by the apex bank’s director, Financial Policy and Regulation Department, Haruna Mustafa, the CBN issued a guideline to financial institutions under its regulatory purview regarding their banking relationship with Virtual Assets Service Providers (VASPs) in Nigeria.
It also confirmed that banks and other financial institutions were still prohibited from holding, trading and/or transacting in virtual currencies on their account.
The ICIR reported the apex bank’s issuance of a circular in February 2021, instructing banks and other financial institutions to close accounts of individuals engaged in cryptocurrency transactions.
According to the CBN, this directive was prompted by the inherent risks of money laundering and terrorism financing (ML/TF), vulnerabilities inherent in their operations, and the absence of regulations and consumer protection measures.
The former CBN Governor Godwin Emefiele noted then that the government’s inability to track the movement of cryptocurrency trading effectively made regulatory functions difficult for the apex bank.
Issuing a new directive, CBN stated that current global trends had shown the need for crypto regulation, adding that all banks and other financial institutions were required to comply quickly with the new guidelines.
“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. Following this development, the Financial Action Task Force (FATF) in 2018 also updated its Recommendation 15 to regulate VASPS to prevent misuse of virtual assets for ML/TF/PF.
“Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognises VASPs as part of the definition of a financial institution. In addition, the Securities and Exchange Commission in May 2022 issued Rules on Issuance, Offering and Custody of Digital Assets and VASPs to provide a regulatory framework for their operations in Nigeria.”
Usman Mustapha is a solution journalist with International Centre for Investigative Reporting. You can easily reach him via: umustapha@icirnigeria.com. He tweets @UsmanMustapha_M