Nigeria’s Central Bank reverses Cryptocurrency ban

Cryptocurrency ban lifted in Nigeria

WEB DESK: Nigeria’s Central Bank has officially lifted the ban on cryptocurrency transactions, citing global trends that emphasise the necessity for regulation in such activities.

The Central Bank of Nigeria (CBN) had previously imposed restrictions in February 2021, prohibiting banks and financial institutions from engaging in or facilitating transactions involving crypto assets.

The primary concerns cited were related to the risks of money laundering and terrorism financing.

Last year, in May, Nigeria’s Securities and Exchange Commission (SEC) introduced regulations for digital assets, signalling the country’s attempt to strike a balance between an outright ban on crypto assets and unregulated usage.

In a circular dated December 22, the CBN acknowledged the evolving global landscape and the imperative to regulate virtual asset service providers (VASPs), encompassing cryptocurrencies and crypto assets.

The latest guidelines outline specific procedures for banks and financial institutions to open accounts, establish designated settlement accounts, provide settlement services, and serve as channels for foreign exchange inflows and trades for entities engaged in crypto asset transactions.

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Notably, VASPs must obtain licencing from the Nigerian SEC to operate in the crypto business.

According to Reuters, the CBN emphasised that, per the regulations, financial institutions must not open or allow the operation of any account for conducting virtual or digital asset business unless they adhere to the guidelines.

However, the circular maintains the prohibition on banks trading, holding, or transacting cryptocurrencies.

Nigeria, with its young and tech-savvy population, has witnessed widespread adoption of cryptocurrencies. The use of peer-to-peer trading offered by crypto exchanges has become a popular alternative within the country’s financial sector.

According to a September report by New York-based blockchain research firm Chainalysis, Nigeria experienced 9 per cent year-over-year growth in crypto transactions, reaching $56.7 billion between July 2022 and June 2023.

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