The Central Bank of Nigeria (CBN), has announced that cash withdrawals will not be possible from accounts opened for virtual and digital asset transactions.
Withdrawals from these accounts would only be available by transfer or manager’s check, according to the apex bank. This was revealed in a new set of ‘Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers.’
According to the CBN, an account formed under its new standards will only be used for virtual or digital asset transactions and will not be utilized for any other reason.
The guideline is,”No cash withdrawal shall be allowed from the account. No third-party check shall be cleared from the account.
”Except for the settlement of a virtual or digital asset transaction, which shall be done through a transfer to another designated account, the withdrawal shall be only through a manager’s check or transfer to an account.”
In December, in a circular titled ‘Circular to all banks and other financial institutions guidelines on operations of bank accounts for Virtual Assets Service Providers,’ with reference number FPR/DIR/PUB/CIR/002/003, and signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa, the banking regulator announced a policy change on crypto assets and directed banks to begin to aid crypto transactions.
In its new policy orientation, the bank claimed that it was more open to the possibility of regulation than its previous position of excluding crypto assets from the conventional banking sector.
The guideline, which was released alongside the circular, is intended to serve as the framework for the reintroduction of cryptocurrency into the formal banking sector.
Speaking on the guideline, the CBN said, “The Guidelines shall apply to banks and other financial institutions under the regulatory purview of the CBN.”
Part of the objectives read, “Provide minimum standards and requirements for banking business relationships and account opening for Virtual Assets Service Providers in Nigeria.”
The guidelines state that financial institutions are now allowed to open designated accounts, provide designated settlement accounts and settlement services, act as channels for FX flows and trade, and engage in any other activity that may be permitted by the CBN from time to time.
Speaking on how virtual asset providers can open accounts, the apex bank noted, ”From the commencement of these Regulations, financial institutions shall not open or permit the operation of any account by any person or entity to conduct the business of virtual or digital assets unless that account is designated for that purpose and opened in line with the requirements of these Guidelines.
“The designated account shall only be opened with the approval of senior management of the FI.”
The new CBN guideline also includes a long list of other rules aimed at protecting the financial system and its consumers from the risks of uncertainty and fraud.
The apex bank emphasized the importance of financial institutions adhering to its criteria, warning that failing banks might have their licenses suspended.
The document read in parts, “Notwithstanding the powers of the CBN under the BOFIA 2020 and in addition to the use of remedial measures in these Guidelines, the CBN may take any or all of the following sanctions against a Fl, its board of directors, officers, or staff for failure to comply with any of the requirements of these Guidelines:
“Prohibition from opening any further designated account; monetary penalty not below the sum of $2,000.00 against the FIs, members of its board, senior management, and any staff for any infraction. Suspension of the operating license of a Fl.”
Following the announced policy shift on crypto by the CBN, the Lead Partner and Head of Blockchain and Virtual Assets Practice at Infusion Lawyers, Senator Ihenyen, told newsmen, “Thankfully, our regulators will now work together to ensure consumer protection and investor safety.
“Nigeria can no longer afford to keep pushing digital assets underground for obvious economic and security reasons, especially when you are number one in crypto adoption in Africa and a leading market around the globe.”
