CBN lifts Cryptocurrency Ban– The Central Bank of Nigeria (CBN) has officially lifted the ban on cryptocurrency transactions within the country, signaling a major shift in its stance on digital assets. The apex bank, in a circular dated December 22, 2023 (reference number FPR/DIR/PUB/CIR/002/003), directed banks to disregard its earlier prohibition on crypto transactions.
This pivotal decision, communicated by the Director of the Financial Policy and Regulation Department, Haruna Mustafa, is encapsulated in the circular titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’ The CBN emphasized that recent global trends necessitate the regulation of crypto activities.
The CBN, in February 2021, issued a circular restricting banks from operating accounts for cryptocurrency service providers due to money laundering and terrorism financing risks. However, recognizing the evolving global landscape, the apex bank acknowledges the imperative to regulate virtual assets service providers (VASPs), including cryptocurrencies and crypto assets,” stated the circular.
The Financial Action Task Force (FATF) played a role in shaping this shift, updating Recommendation 15 in 2018 to require the regulation of VASPs to prevent misuse of virtual assets for illicit activities. The Money Laundering (Prevention and Prohibition) Act, 2022, also recognizes VASPs as part of the definition of a financial institution. Additionally, the Securities and Exchange Commission in May 2022 issued rules providing a regulatory framework for the operations of VASPs in Nigeria.
This new guideline supersedes previous ones, specifically referencing FPR/DIR/GEN/CIR/06/010 of January 12, 2017, and BSD/DIR/PUB/LAB/014/001 of February 5, 2021. The CBN clarified that while banks and financial institutions are now allowed to engage with VASPs, they are still prohibited from holding, trading, or transacting in virtual currencies on their own account.
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The circular (reference number BSD/DIR/PUB/LAB/014/001) dated February 5, 2021, served as a reminder of the previous ban, urging banks to identify and close accounts associated with cryptocurrency exchanges. The apex bank emphasizes strict compliance with the new guidelines, marking a significant shift in the regulatory landscape surrounding cryptocurrency transactions in Nigeria.
This decision aligns with global efforts to establish comprehensive regulatory frameworks for the burgeoning cryptocurrency industry, fostering a balance between innovation and risk mitigation. As Nigeria embraces this new era, stakeholders eagerly await the unfolding impact on the country’s financial landscape.
CBN lifts Cryptocurrency Ban