Central Bank of Nigeria Reverses Ban on Crypto Transactions, Introduces New Guidelines

In a remarkable policy shift, the Central Bank of Nigeria (CBN) has overturned its previous ban on crypto transactions within the country. This significant change came through a circular dated December 22, 2023 (with reference number FPR/DIR/PUB/CIR/002/003), signed by Haruna Mustafa, the Director of the Financial Policy and Regulation Department at the apex bank.

Titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ the circular underscores the CBN’s acknowledgment of the global need for crypto regulation.

The CBN highlighted the evolution of global trends, emphasizing the necessity to regulate virtual assets service providers (VASPs), encompassing cryptocurrencies and related assets. This shift aligns with international standards, such as the Financial Action Task Force’s (FATF) updated Recommendation 15 in 2018, compelling regulation of VASPs to prevent financial misuse.

The bank referenced the Money Laundering (Prevention and Prohibition) Act, 2022, which officially recognizes VASPs as part of the financial institution definition. Additionally, it mentioned the Securities and Exchange Commission’s issuance of rules in May 2022 to establish a regulatory framework for VASPs operating in Nigeria.

Replacing prior guidelines from 2017 and 2021, the new directive supersedes the CBN’s older stances on the matter. However, the CBN reiterated that banks and financial institutions remain barred from independently holding, trading, or transacting in virtual currencies.

Emphasizing immediate compliance, the CBN mandated all financial entities under its purview to adhere to the new guidelines, marking a pivotal turn in Nigeria’s crypto landscape.

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