The Central Bank of Nigeria (CBN) has reversed its earlier stance on cryptocurrency transactions in the country, lifting the ban and instructing banks to disregard its previous directive. In a circular dated December 22, 2023, the CBN highlighted the need for cryptocurrency regulation globally and acknowledged the risks associated with money laundering, terrorism financing, and the absence of consumer protection measures.
The circular, titled ‘Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ emphasized the importance of regulating virtual assets service providers, including cryptocurrencies and crypto assets. The CBN cited global trends and the Financial Action Task Force’s (FATF) recommendation for the regulation of VASPs to prevent misuse for money laundering, terrorism financing, and proliferation financing.
The circular noted that the Securities and Exchange Commission (SEC) had issued rules in May 2022 to provide a regulatory framework for the operations of VASPs in Nigeria. It also mentioned Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022, which recognizes VASPs as part of the definition of a financial institution.
The new guideline supersedes the CBN’s previous directives on cryptocurrency transactions issued in 2017 and 2021. However, the CBN reiterated that banks and financial institutions are still prohibited from holding, trading, or transacting in virtual currencies on their own account. All banks and financial institutions are required to comply with the new guideline immediately.
This move by the CBN reflects a shift in its approach to cryptocurrencies and acknowledges the need for a regulatory framework to address the challenges associated with virtual assets.
