July 20, 2024

The Central Bank of Nigeria, CBN, has reconsidered its stance on the ban on cryptocurrency transactions in the country.

The country’s central bank announced on Friday that it has modified its attitude on crypto assets and asked banks to overlook its previous ban on crypto transactions.

This is stated in a circular dated December 22, 2023, with the reference number FPR/DIR/PUB/CIR/002/003, and signed by Haruna Mustafa, Director, Financial Policy and Regulation Department.

The circular is titled ‘Circular to all Banks and Other Financial Institutions Guidelines on the Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’

The apex bank added that existing worldwide patterns demonstrated the need for crypto regulation.

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.

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“However, current trends globally have shown that there is need to regulate Virtual Assets Service Providers (V/ASPs) which activities of virtual assets service 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 recognizes 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.”

The apex bank noted that this new guideline supersedes its old ones referenced FPR/DIR/GEN/CIR/06/010 of January 12, 2017, and BSD/DIR/PUB/LAB/014/001 of February 5, 2021 on the subject.

It 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 guideline. In its circular with reference number BSD/DIR/PUB/LAB/014/001, dated February 5, 2021, the apex bank reminded banks that dealing in crypto currencies or facilitating payments for cryptocurrency exchanges was prohibited.

At the time, it asked banks to identify persons or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that their accounts were closed.

 

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