The Central Bank of Nigeria (CBN) has officially lifted the ban on cryptocurrency transactions within the Nigerian banking system, a prohibition that has been in effect for the past two years.
The decision, outlined in a circular sent to banks and financial institutions, comes after two years of advocacy from crypto enthusiasts and companies urging the apex bank to reconsider its stance.
The CBN cited the guidelines for crypto companies issued by the Nigerian Securities Exchange Commission (SEC) in 2022 as an additional reason for the policy change.
This signals a collaborative effort between regulatory bodies to establish a comprehensive framework for the crypto industry in Nigeria.
Under the new guidelines, banks are now permitted to open accounts for crypto companies (VASPs), offer designated settlement accounts, and act as channels for foreign exchange flows and trade.
To ensure compliance and transparency, banks are obligated to collect the Bank Verification Numbers (BVNs) of all directors and owners of crypto companies availing their services.
Stringent Know Your Customer (KYC) measures have been outlined in the guidelines, emphasizing the importance of due diligence before a VASP can establish an account with a bank.
However, banks and other financial institutions are still prohibited from engaging in trading, holding, or transacting with cryptocurrencies.
“Following this development, the Financial Action Task Force (FATF) also updated its recommendation to require VASPs to be regulated, to prevent misuse of virtual assets.
“Given the foregoing, the CBN hereby issues this guideline to guide financial institutions under its regulatory purview concerning their relationship with VASPs in Nigeria.
“The guidelines supersede the CBN circular of Feb. 5, 2021on the subject.”