BREAKING: CBN Lifts Ban On Cryptocurrency Transactions (WHAT TO KNOW)

BREAKING: CBN Lifts Ban On Cryptocurrency Transactions (WHAT TO KNOW)

The Central Bank of Nigeria has revised its position on crypto assets within the country, instructing banks to disregard its previous prohibition on cryptocurrency transactions.

A circular, dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, and signed by Haruna Mustafa, the Director of the Financial Policy and Regulation Department, announced this change.

Titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ the circular emphasizes the necessity for crypto regulation, citing global trends as a driving factor for this adjustment in the central bank’s approach.

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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. “

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