CBN Reverses Cryptocurrency Ban: New Guidelines Unveiled

 


In a surprising turn of events, the Central Bank of Nigeria (CBN) has reevaluated its stance on cryptocurrency transactions, urging banks to dismiss its earlier prohibition. The circular, dated December 22, 2023, and signed by Haruna Mustafa, the Director of the Financial Policy and Regulation Department, introduces fresh guidelines titled "Circular to all Banks and other Financial Institutions: Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS)."

This updated directive emphasizes the global shift towards crypto regulation, acknowledging the evolving landscape. While the CBN had initially imposed restrictions in February 2021 due to concerns about money laundering and terrorism financing risks, the current circular aligns with international developments.

Referencing global trends and regulatory frameworks, including the Financial Action Task Force (FATF) recommendations and the Money Laundering Prevention and Prohibition Act 2022, the CBN recognizes Virtual Assets Service Providers (VASPs) as integral to the financial ecosystem. Notably, the Securities and Exchange Commission had previously issued rules in May 2022 to regulate the issuance, offering, and custody of digital assets and VASPs in Nigeria.

This fresh guideline, superseding previous ones, reaffirms the prohibition on banks and financial institutions from directly engaging in virtual currencies. However, it provides comprehensive guidance on establishing banking relationships with VASPs in Nigeria.

As financial institutions navigate these updated directives, it is essential for them to align with the CBN's new guidelines promptly. The circular emphasizes compliance with the evolving landscape of crypto regulation, signaling a notable shift in the CBN's approach.

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