CBN lifts ban on cryptocurrency transactions

The Central Bank of Nigeria (CBN) has lifted the ban on cryptocurrency transactions in the country.

The apex bank in February 2021 ordered all financial institutions in the country, including banks to shut accounts of citizens or entities involved in cryptocurrency transactions within their systems.

The CBN had earlier warned that digital currencies such as Bitcoin, Litecoin, and others are largely used in terrorism financing and money laundering.

It stressed that such currencies are not accepted as legal tender in Nigeria because of the anonymity of virtual transactions.

However, in a circular with reference number FPR/DIR/PUB/CIR/002/003, dated December 22, 2023, and signed by its Director of Financial Policy and Regulation, Haruna Mustafa, the CBN asked banks to disregard its earlier ban on crypto transactions in the country.

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The statement read: “The CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers given 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 include providers (V/ASPs) which activities of virtual assets service 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 recognizes 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.

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“Given 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.”