Nigeria CBN Set To Lift Ban On Cryptocurrency Transactions

The Nigeria Government Through The CBN Set To Lift Ban On Cryptocurrency Transactions Across the Nation

This is coming after months of ban on all cryptocurrency across the country by former President Buhari’s lead administration

The present Government of Nigeria through the Central Bank of Nigeria has changed its stance on crypto assets and is now set to lift the ban

This is according to a circular “Press Released” dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, and signed by the apex bank’s Director, Financial Policy and Regulation Department, Haruna Mustafa.

The CBN has asked all banks in Nigeria to disregard its earlier ban on crypto transactions as they are also subjected to follow the new directives

The circular is titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’

According to the report. in quotes below

The apex bank stated that current trends globally have shown the need for crypto regulation.

It said, “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 as well as the absence of regulations and consumer protection measures.

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“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 announcement, the developing thread, 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 recognizes 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.

“Given the foregoing, the CBN hereby issues this guideline to guide financial institutions under its regulatory purview concerning their banking relationship with VASPs in Nigeria. “

The apex bank noted that this new 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 that banks and other financial institutions are still prohibited from holding, trading, and/or transacting in virtual currencies on their account.

It added all banks and other financial institutions are required to immediately comply with its new directives and guidelines

In its circular with reference number BSD/DIR/PUB/LAB/014/001, dated February 5, 2021, the apex bank reminded banks that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges was prohibited then.

At the time, it asked banks to identify persons or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that their accounts were closed.