In a significant policy shift, the Central Bank of Nigeria (CBN) has reversed its stance on crypto assets in the country and directed banks to disregard its earlier ban on crypto transactions. This reversal is outlined in a circular dated December 22, 2023, signed by Haruna Mustafa, the Director of the Financial Policy and Regulation Department at the apex bank.
The circular, titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ highlights the changing global landscape and the imperative for crypto regulation. The CBN acknowledges the need to regulate virtual assets service providers (VASPs), including cryptocurrencies and crypto assets, in light of international trends and recommendations from bodies like the Financial Action Task Force (FATF).
The circular cites the Money Laundering (Prevention and Prohibition) Act, 2022, recognizing VASPs as part of the definition of a financial institution. It also references the Securities and Exchange Commission’s issuance of rules in May 2022, providing a regulatory framework for the operations of VASPs in Nigeria.
The new guideline supersedes previous ones issued in 2017 and 2021, emphasizing the need for financial institutions under the CBN’s regulatory purview to establish banking relationships with VASPs in Nigeria. However, the circular maintains the prohibition for banks and financial institutions to hold, trade, or transact in virtual currencies on their own account.
The CBN urges immediate compliance with the new guidelines, emphasizing the regulatory evolution in response to the dynamic crypto landscape. This move signifies a notable departure from the CBN’s earlier position, as outlined in a circular dated February 5, 2021, which prohibited banks from dealing in cryptocurrencies and facilitating payments for cryptocurrency exchanges.
The revised stance aligns with the evolving global perspective on crypto assets, recognizing the necessity for regulation and oversight. The CBN’s directive indicates a commitment to strike a balance between fostering innovation and ensuring financial system integrity.
