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BREAKING: Central Bank of Nigeria (CBN) lifts ban on crypto transactions

TL;DR

  • The Central Bank of Nigeria (CBN) has officially lifted its ban on cryptocurrency transactions, signaling a major shift in the country’s financial approach.
  • The decision, revealed in a December 22, 2023 circular, follows global trends emphasizing the regulation of virtual assets service providers (VASPs), addressing risks like money laundering.
  • While allowing banking transactions with VASPs, the CBN strictly prohibits banks from engaging in direct holding, trading, or transacting virtual currencies on their accounts.

The Central Bank of Nigeria (CBN) has officially rescinded its ban on cryptocurrency transactions, as revealed in a December 22, 2023 circular. Haruna Mustafa, Director of the Financial Policy and Regulation Department, made the announcement, further underscoring Nigeria’s commitment to adapting to the dynamic global financial landscape.

The CBN’s decision comes in response to evolving global trends emphasizing the need to regulate virtual assets service providers (VASPs), including cryptocurrencies and crypto assets. The circular, titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPs),’ acknowledges the imperative of managing associated risks such as money laundering and terrorism financing. This move aligns with recommendations from the Financial Action Task Force (FATF) and marks a departure from the CBN’s previous directives in 2017 and 2021.

New guidelines for banking activities with VASPs

In light of the policy reversal, the CBN has issued fresh guidelines aimed at regulating banking activities related to VASPs, outlining the operation of bank accounts for these entities. Significantly, Section 30 of the Money Laundering Act of 2022 now officially recognizes VASPs as part of the definition of a financial institution. The guidelines emphasize the immediate necessity for compliance from all banks and financial institutions in Nigeria.

Continued prohibition on direct crypto transactions

While lifting the ban opens doors for banking transactions with VASPs, the CBN maintains a clear stance on banks and financial institutions engaging in holding, trading, or transacting virtual currencies on their own accounts. These activities remain strictly prohibited. This nuanced approach demonstrates Nigeria’s receptiveness to the digital currency wave while exercising prudence in mitigating potential risks.

This significant policy shift by the CBN marks a transformative chapter in Nigeria’s financial history. It reflects the country’s willingness to embrace evolving global financial trends while maintaining a vigilant approach to managing potential risks associated with the crypto space.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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