The Central Bank of Nigeria (CBN) has announced lifting the ban on cryptocurrency nearly three years after it restricted banks from operating accounts for cryptocurrency service providers and users. The apex bank also announced a new restriction on financial institutions from directly transacting virtual assets.
Recall that the CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers given the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations and the absence of regulations and consumer protection measures.
In a circular issued by the CBN Director, Financial Policy and Regulation department, Haruna Mustafa, the apex bank said it has issued a guideline to guide financial institutions under its regulatory purview in respect of their banking relationship with Virtual Assets Service Providers (VASPs) in Nigeria.
The circular reads: “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.
The guidelines, issued to all banks and other financial institutions on Friday, December 22, 2023, stipulate conditions for virtual asset providers to open an account. The CBN, however, emphasised that banks and other financial institutions are still prohibited from holding, trading, and transacting in virtual currencies on their account.
