The Central Bank of Nigeria, (CBN), has stated that cash withdrawals will not be possible from accounts opened for virtual and digital assets transactions.
According to the apex bank, which revealed this in a new ‘Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers’, withdrawals from these accounts will only be possible by transfer or through a manager’s cheque.
In a December circular, titled, ‘Circular to all banks and other Financial Institutions guidelines on operations of bank accounts for Virtual Assets Service Providers, and signed by the Director, Financial Policy” and Regulation Department, Haruna Mustafa, the banking regulator announced a policy change on crypto assets and directed banks to begin to aid crypto transactions.
The apex bank said an account opened under its new guidelines will only be used for transactions on virtual/digital assets and not for any other purpose.The guideline read in part: “No cash withdrawal shall be allowed from the account. No third-party cheque shall be cleared from the account. Except for settlement of a virtual/digital assets transaction which shall be done through a transfer to another designated account, the withdrawal shall be only through a managers’ cheque or transfer to an account”.
In its new policy direction, the Bank stated that it was more open to the idea of regulation rather than its earlier position of the restriction of crypto assets from the formal banking sector. The guideline, published alongside the circular, is meant to serve as the framework for the reintroduction of crypto into the formal banking sector.
Commenting on the guideline, the CBN said, “The Guidelines shall apply to banks and other financial institutions under the regulatory purview of the CBN”.
Based on the guidelines, financial institutions are now allowed to undertake the following activities in their operations of accounts for Virtual Assets Service Providers including, opening designated accounts, the provision designated settlement accounts and settlement services, acting as channels for FX flows and trade, and any other activity that may be permitted by the CBN from time to time.
The new CBN guideline further provided an extensive list of other requirements aimed at protecting the financial system and customers from uncertainty and fraud risks. Emphasising on the need for financial institutions to adhere to its guidelines, the apex bank highlighted that erring banks could get their licence suspended.
