The Central Bank of Nigeria has revised its position on cryptocurrency assets within the country, instructing banks to disregard the previous prohibition on crypto transactions.
This information is detailed in a circular dated December 22, 2023 (reference number FPR/DIR/PUB/CIR/002/003) and signed by Haruna Mustafa, the Director of the apex bank’s Financial Policy and Regulation Department.
The circular, titled ‘Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ highlights the necessity for crypto regulation, citing ongoing global trends.
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. “
The apex bank highlighted that this updated guideline overrides its prior directives outlined in FPR/DIR/GEN/CIR/06/010 dated January 12, 2017, and BSD/DIR/PUB/LAB/014/001 dated February 5, 2021, pertaining to the subject.
Furthermore, it reconfirmed the prohibition for banks and other financial institutions from engaging in the possession, trading, or conducting transactions involving virtual currencies autonomously. The apex bank emphasized that immediate compliance with the new guideline is mandatory for all banks and financial entities.
In a circular bearing reference number BSD/DIR/PUB/LAB/014/001 dated February 5, 2021, the apex bank reiterated the prohibition for banks to engage in cryptocurrency dealings or facilitate payments for crypto exchanges.
At that time, banks were instructed to identify individuals or entities involved in crypto transactions or operating cryptocurrency exchanges within their systems and ensure the closure of their accounts.
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