The Central Bank of Nigeria (CBN) has reversed its stance on crypto assets in the country, instructing banks to disregard its previous prohibition on crypto transactions.
This is stated in a circular dated December 22, 2023, with the reference number FPR/DIR/PUB/CIR/002/003, and signed by Haruna Mustafa, Director, Financial Policy and Regulation Department, of the apex bank.
The circular is titled ‘Circular to All Banks and Other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’
The apex bank added that existing worldwide trends have demonstrated the need for crypto regulation.
It said, “The CBN, in February 2021, issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers 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, current trends globally have shown that there is a need to regulate the activities of virtual asset 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 for ML, TF, and PF.
“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 issued Rules on Issuance, Offering, and Custody of Digital Assets and VASPs in May 2022 to provide a regulatory framework for their operations in Nigeria.
“In view of the foregoing, the CBN hereby issues this guideline to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria.”
The CBN stated that this new guideline supersedes its previous ones, FPR/DIR/GEN/CIR/06/010 dated January 12, 2017, and BSD/DIR/PUB/LAB/014/001 dated February 5, 2021.
It also confirmed that banks and other financial institutions are still forbidden from owning, trading, or transacting in virtual currencies on their own behalf.
It also stated that all banks and other financial institutions must immediately comply with its new guidelines.
The CBN warned banks in its circular with reference number BSD/DIR/PUB/LAB/014/001, dated February 5, 2021, that dealing in crypto currencies or enabling payments for cryptocurrency exchanges was forbidden.
It asked banks at the time to identify individuals or businesses engaging in or operating crypto currency exchanges within their systems and close their accounts.
