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The Central Bank of Nigeria (CBN) has lifted the embargo placed on cryptocurrency assets in the country and asked banks to ignore its earlier pronouncement banning crypto transactions.
The crypto policy reversal was announced in a circular dated Friday, December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003 and signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa.
Tagged, ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ the notice said the apex bank had changed its earlier stance on crypto assets in the country.
The development is in line with the need to align with current global trends, which showed a need for crypto regulation, the CBN stated.
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 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 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 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.
“In view of the foregoing, the CBN hereby issues this guideline to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria.“
The CBN noted that this latest guideline supersedes its old ones referenced FPR/DIR/GEN/CIR/06/010 of January 12, 2017, and BSD/DIR/PUB/LAB/014/001 of February 5, 2021 on the subject.
It also affirmed banks and other financial institutions are still prohibited from holding, trading, and/or transacting in virtual currencies on their account.
In addition, the apex bank said all banks and other financial institutions are required to immediately comply with its new guidelines.
Recall the erstwhile CBN governor, Godwin Emefiele, had, in 2021, prohibited banks from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges in Nigeria.
At the time, it mandated banks to identify persons or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that their accounts were closed.