Nigeria's Central Bank Overturns Ban on Cryptocurrency Transactions, Calls for Enhanced Regulations
Summary:
The Central Bank of Nigeria (CBN) has lifted a two-year ban on banks handling cryptocurrency transactions. Citing increased global acceptance of digital currencies, the latest circular includes guidelines to enforce customer KYC and anti-money laundering checks while engaging in crypto transactions. However, banks are still prohibited from trading or holding cryptocurrencies in their own accounts. This comes amidst calls for the federal government to enforce regulations that would advance the implementation of the approved blockchain policy across various sectors.
The Central Bank of Nigeria (CBN) has reversed its decision to impose restrictions on banks performing cryptocurrency transactions. This comes after two years since the total prohibition of digital currency dealings by banks was enforced. On December 22, the CBN, recognizing the rising global usage and acceptance of cryptocurrency, sent out a circular to banks stating it's no longer reasonable to uphold the existing strict limitations enacted in 2021 on financial institutions. It stated that the global trends highlight the necessity to control the operations of businesses dealing with virtual assets, which includes cryptocurrencies.
The CBN in Nigeria has lifted the prohibition on cryptocurrency transactions. Banks were previously barred from conducting any crypto-related transactions following an order in 2021. The most recent circular, conversely, provides firm guidelines that support cryptocurrency, while enforcing stringent customer KYC and anti-money laundering checks.
The given guidelines strive to establish fundamental standards and prerequisites for setting up banking relationships and initiating accounts for businesses that provide virtual assets (VASPs) in Nigeria. Furthermore, the aim of the guidelines is to support solid risk management practices within the banking sector pertaining to the operations of licensed VASPs. However, the circular emphasizes that it is still not permitted for financial institutions to hold, trade, or carry out transactions in cryptocurrency through their own accounts.
Cointelegraph reported in February 2021 that the Central Bank of Nigeria had instituted a ban that stopped all regulated financial institutions from providing services to crypto exchanges in the country.
On a related note, the Nigerian federal government was recently urged by the local blockchain industry to enact regulations that promote extensive implementation of the approved blockchain policy in the country. Obinna Iwuno, the president of the Stakeholders in Blockchain Association of Nigeria (SiBAN), emphasized the importance of setting up a regulatory framework to hasten the integration of blockchain technology across various sectors of the economy.
Iwuno told Cointelegraph that Nigeria is fully prepared to employ blockchain technology and said, “We are ready for full adoption now, and the blockchain policy initiated by the government positions Nigeria as a frontrunner in the continental digital economy landscape if fully implemented.”
Published At
12/23/2023 8:32:19 AM
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