The Central Bank of Nigeria (CBN) has made a notable reversal in its stance on cryptocurrency assets, rescinding the previous embargo and instructing banks to dismiss its earlier directive that banned crypto transactions.
This policy shift was conveyed through a circular dated Friday, December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, signed by Haruna MustafaTagged, the Director of the Financial Policy and Regulation Department. Entitled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ the notice explicitly signaled a departure from the CBN’s previous position on crypto assets in the country.
Attributing this adjustment to the imperative of aligning with prevailing global trends, the CBN emphasized the critical need for regulating cryptocurrencies. The circular outlined that the CBN had initially issued a directive in February 2021, limiting banks and financial institutions from establishing accounts for cryptocurrency service providers due to concerns about money laundering, terrorism financing, and a lack of regulations and consumer protection measures.
However, recognizing the evolving global landscape, the CBN acknowledged the essential role of regulating virtual assets service providers (VASPs), including cryptocurrencies. This strategic shift aligns with recommendations from the Financial Action Task Force (FATF) and the regulatory framework established by the Securities and Exchange Commission in Nigeria.
The new guideline issued by the CBN supersedes its previous directives from January 12, 2017, and February 5, 2021. It clarified that banks and financial institutions remain explicitly barred from holding, trading, and/or transacting in virtual currencies. The apex bank underscored the immediate requirement for all banks and financial institutions to comply with the updated guidelines.
This move signals a significant departure from the regulatory landscape of cryptocurrency transactions in Nigeria, overturning the previous directive issued by the former CBN governor, Godwin Emefiele, in 2021, which prohibited banks from engaging in cryptocurrency dealings.
