CBN Lifts Ban On Cryptocurrency Transactions In Nigeria

…Prohibits Banks From Holding, Trading On Own Account

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The Central Bank of Nigeria (CBN) has lifted the ban on cryptocurrency and has issued Guidelines to provide guidance to financial institutions on its transactions in Nigeria.

Recall, that CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers.

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This, it said was 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, in a policy swing on Friday, the apex bank announced through a circular issued to banks and other financial institutions in the country by the Director, Financial Policy and Regulation Department, Haruna Mustafa that the ban has been lifted.

The circular said, “the current trends globally have shown that there is 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.

“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 Guidelines to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria.

“The Guidelines supersedes the CBN’s circulars 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.

“However, banks and other financial institutions are still prohibited from holding, trading and/or transacting in virtual currencies on their own account.

“Accordingly, all banks and other financial institutions are hereby required to immediately comply with the provisions of the Guidelines”, it said.

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