After two years, CBN lifts ban on cryptocurrency transactions

The Central Bank of Nigeria (CBN) has lifted the ban it imposed two years ago on cryptocurrency transactions in the Nigerian banking system.

The CBN announced the reversal of the policy in a circular by Haruna Mustapha, its Director of Financial Policy and Regulation.

Mustapha said that the apex bank would now provide regulations for financial institutions on how to manage cryptocurrency to avoid misuse.

The CBN issued a circular in February 2021, restricting banks and other financial institutions from operating accounts for cryptocurrency service providers.

The then CBN Governor, Godwin Emefiele, had announced that the restriction was necessary given the money laundering and terrorism financing risks posed by cryptocurrency.

Emefiele also said that the vulnerability inherent in cryptocurrency operations, as well as the absence of regulation and consumer protection measures were also responsible for the policy.

According to Mustapha, current global trends 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) also updated its recommendation to require VASPs to be regulated, to prevent misuse of virtual assets.

“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 relationship with VASPs in Nigeria.

“The guidelines supersedes the CBN circular of Feb. 5, 2021on the subject,” the director said.

He, however, warned that banks and other financial institutions were still prohibited from holding, trading or transacting in cryptocurrencies on their account.

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