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“The Central Bank of Nigeria has shifted its position on crypto assets, rescinding its previous ban on crypto transactions. In a circular dated December 22, 2023, the bank, through Director Haruna Mustafa, emphasized the necessity of crypto regulation due to global trends. The circular, titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ instructs banks to disregard the earlier ban.”
“The Central Bank of Nigeria, in February 2021, issued a circular restricting banks and financial institutions from operating accounts for cryptocurrency service providers due to money laundering and terrorism financing risks. However, global trends indicate the need to regulate virtual assets service providers (VASPs), including cryptocurrencies. The Financial Action Task Force (FATF) updated its Recommendation 15 in 2018, requiring VASPs to be regulated. Additionally, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognizes VASPs as part of the definition of a financial institution.”
“Additionally, in May 2022, the Securities and Exchange Commission issued Rules on Issuance, Offering, and Custody of Digital Assets and VASPs, establishing a regulatory framework for their operations in Nigeria. In light of these developments, the CBN issues new guidelines to provide direction to financial institutions regarding their banking relationships with VASPs in Nigeria.
This new guideline supersedes the previous ones referenced FPR/DIR/GEN/CIR/06/010 of January 12, 2017, and BSD/DIR/PUB/LAB/014/001 of February 5, 2021. The CBN reiterates that banks and financial institutions are prohibited from holding, trading, and/or transacting in virtual currencies on their own account. All banks and financial institutions are required to promptly comply with the new guideline.
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