Nearly two years after enforcing a comprehensive ban on banks engaging with digital currencies, the Central Bank of Nigeria (CBN) has now lifted restrictions on Nigerian banks facilitating cryptocurrency transactions.
In a circular sent to banks on Dec. 22, the CBN recognized that the increasing global demand and adoption of crypto make it unjustifiable to maintain the stringent restrictions imposed on financial institutions in 2021.
The statement noted:
“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.”
Nigeria's CBN has removed restrictions on cryptocurrency transactions. The original 2021 order banned banks from crypto-related transactions.
— Abubakar (@IAtalkspace) December 22, 2023
The latest circular, however, gives clear guidelines supporting crypto, but with stringent customer KYC and anti-money laundering checks. https://t.co/4YW4RKEKGP pic.twitter.com/XCRc7fjz9Y
The guidelines aim to establish minimum standards and requirements for establishing banking relationships and opening accounts for virtual asset service providers (VASPs) in Nigeria.
Additionally, the guidelines aim to ensure robust risk management practices within the banking industry concerning the activities of licensed VASPs.
However, the statement emphasizes that financial institutions are still prohibited from holding, trading or conducting transactions in cryptocurrency using their own accounts.
In February 2021, Cointelegraph reported that the Central Bank of Nigeria had imposed a ban on all regulated financial institutions from offering services to crypto exchanges in the country.
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Meanwhile, in recent news, the local blockchain industry called on the federal government of Nigeria to implement regulations that will foster the widespread integration of the approved blockchain policy in the country.
Obinna Iwuno, the president of the Stakeholders in Blockchain Association of Nigeria (SiBAN), recently stressed the necessity of establishing a regulatory framework to accelerate the infusion of blockchain technology into diverse sectors of the economy.
Iwuno told Cointelegraph that Nigeria is fully equipped to implement blockchain technology:
“We are ready for full adoption now, and the blockchain policy initiated by the government positions Nigeria as a trailblazer in the continent’s digital economy landscape if fully implemented.”
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