The Central Bank of Nigeria has reconsidered its stance on the prohibition of crypto-currency transactions in the country.
The apex bank said on Friday that it had changed its stance on crypto assets in the country and asked banks to disregard its earlier ban on crypto transactions.
This is contained in a circular dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, and signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa.
The circular is tagged ‘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 showed the need for crypto regulation.
It stated: “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 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 (SEC), 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 that 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 had asked the banks to identify persons or entities transacting in/or operating cryptocurrency exchanges within their systems and ensure that their accounts were closed.
