The Central Bank of Nigeria (CBN) has issued new instructions now directing banks to disregard its earlier ban on crypto transactions.
Reversing a 2021 order that directed banks to prevent transactions and to shut down accounts dealing in Cryptos, the new rule become operational immediately.
The CBN issued the reversal of its earlier banning of Cryptos by the Muhammadu Buhari regime under the former Governor Godwin Emefiele, in a circular dated December 22, 2023, and signed by CBN Director of Financial Policy and Regulation Department, Haruna Mustafa.
Former Vice President Yemi Osinbajo had subtly opposed the ban, instead calling for the regulation of cryptocurrencies in Nigeria instead of the outright prohibition by the CBN.
Osinbajo spoke his mind at the Bankers Committee Vanguard in Lagos State on February 26, 2021.
Titled ‘Circular to All Banks and Other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),” the Friday’s new memo by CBN stated that current trends globally had shown 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 assets 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/PF.
“Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognises VASPs as part of the definition of a financial institution.
“In addition, the Securities and Exchange Commission in May 2022 issued Rules on Issuance, Offering and Custody of Digital Assets and VASPs 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The apex bank noted that this new guideline superseded its old ones of January 12, 2017, and February 5, 2021.
However, the bank affirmed that banks and other financial institutions were still prohibited from holding, trading and/or transacting in virtual currencies on their own account.
It added all banks and other financial institutions would be required to immediately comply with its new guideline.
In its circular with reference number BSD/DIR/PUB/LAB/014/001, dated February 5, 2021, the apex bank reminded banks that dealing in Crypto currencies or facilitating payments for Cryptocurrency exchanges was prohibited.
Back then, it asked banks to identify persons or entities transacting in or operating crypto currency exchanges within their systems and ensure that their accounts were closed.
