CBN lifts ban on Cryptocurrency transactions in Nigeria

The Central Bank of Nigeria has lifted the ban on cryptocurrency transactions in Nigeria. In a circular dated December 22, 2023, titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS), the bank announced the lifting of its previous restrictions.

The circular explains that the need to regulate virtual assets service providers (VASPs), including cryptocurrencies and crypto assets, has become evident in light of current developments. The Financial Action Task Force (FATF) also updated its Recommendation 15 in 2018, emphasizing the importance of regulating VASPs to prevent the misuse of virtual assets for money laundering, terrorism financing, and other illicit activities.

This decision by the Central Bank of Nigeria marks a significant step towards embracing the potential benefits of cryptocurrencies while ensuring the necessary safeguards are in place.

Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognises VASPs as part of the definition of a financial institution. “In addition, the Securities and Exchange Commission in May 2022 issued Rules on Issuance, Offering and Custody of Digital Assets and VASPs to provide a regulatory framework for their operations in Nigeria. “In view of the foregoing, the CBN hereby issues this guideline to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria.