The Central Bank of Nigeria (CBN) has made a significant shift in its stance on cryptocurrency assets, urging banks to disregard its earlier ban on crypto transactions.
This announcement comes through a circular dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, signed by Haruna Mustafa, the Director of the Financial Policy and Regulation Department.
The circular, titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ acknowledges the evolving global trends in the regulation of cryptocurrencies.
The CBN emphasized the need for regulation in the sector, citing the risks of money laundering, terrorism financing, and the absence of adequate consumer protection measures.
The circular states, “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 CBN highlighted the Securities and Exchange Commission’s issuance of rules in May 2022 to provide a regulatory framework for the operations of virtual assets service providers (VASPs) in Nigeria.
The new guideline supersedes previous ones issued by the CBN on the subject. The apex bank clarified that banks and other financial institutions are still prohibited from holding, trading, and/or transacting in virtual currencies on their own account.
The directive also called for immediate compliance from all banks and financial institutions under the regulatory purview of the CBN.
