CBN Lifts Ban On Cryptocurrency Transactions

The Central Bank of Nigeria (CBN) has lifted the ban on cryptocurrency assets in the country and asked banks to disregard its earlier ban on crypto transactions.

The apex bank’s Director of Financial Policy and Regulation Department, Haruna Mustafa, made this known in a circular dated Friday, December 22, 2023

In the circular is titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS)’ the apex bank stated that current trends globally have shown the need for crypto regulation.

The apex bank noted that this new guideline supersedes its old ones referenced released on January 12, 2017, and on February 5, 2021, on the subject.

The CBN also affirmed that banks and other financial institutions are still prohibited from holding, trading and/or transacting in virtual currencies on their own account.

It added all banks and other financial institutions are required to immediately comply with its new guidelines.

It said, “The CBN, in February 2021  issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures.

“However, current trends globally have shown that there is a need to regulate the activities of virtual assets service providers (VASPs) which include cryptocurrencies and crypto assets. Following this development, the Financial Action Task Force (FATF) in 2018 also updated its Recommendation 15 to require VASPS to be regulated to prevent misuse of virtual assets for ML/TF/PF.

“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.”

Recall that the apex bank had in a circular with reference number BSD/DIR/PUB/LAB/014/001, dated February 5, 2021, the apex bank reminded banks that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges was prohibited.

The CBN asked banks to identify persons or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that their accounts were closed