The Central Bank of Nigeria (CBN) has removed limitations on virtual asset service providers (VASP), allowing them to open accounts with banks and other financial institutions.
However, the CBN stated that banks are still prohibited from holding, trading, or transacting in virtual currencies on their own accounts.
According to a crypto exchange operator who spoke to Kluemedia, it is a sign of “good times ahead” for Nigeria’s crypto currency business.
The CBN, led by Godwin Emefiele, imposed a prohibition on banks providing accounts for cryptocurrency exchanges and individuals exposed to bitcoin in February 2021. The CBN ordered the closure of all crypto companies’ accounts.
Furthermore, the regulator cautioned local financial institutions not to engage in crypto assets or facilitate payments for crypto exchanges.
The prohibition was imposed due to concerns about money laundering (ML), terrorism financing (TF), cybercrime, and cryptocurrency volatility.
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However, in its most recent circular, the CBN urged all banks and OFIs to provide cryptocurrency services.
According to the regulator, commercial banks must completely comply with the provisions of the VASP guidelines.
Current global trends indicate a need to regulate the activities of virtual asset service providers (VASPs), which include cryptocurrencies and crypto assets, according to the CBN.
“In response to this development, the Financial Action Task Force (FATF) updated Recommendation 15 in 2018 to require VASPs to be regulated in order to prevent the misuse of virtual assets for ML/TF/proliferation of weapons of mass destruction (PF).”
Furthermore, VASPs are included in the definition of a financial institution under Section 30 of the Money Laundering (Prevention and Prohibition) Act of 2022.
“In addition, in May 2022, the Securities and Exchange Commission (SEC) issued rules on the issuance, offering, and custody of digital assets and VASPs in Nigeria to provide a regulatory framework for their operations.”
In light of the foregoing, the CBN hereby offers the following guidelines to assist financial institutions subject to its regulatory scope in their banking relationships with VASPs in Nigeria.
“The guidelines supersede the CBN’s circulars on the subject, FPR/DIR/GEN/CIR/06/010 dated January 12, 2017, and BSD/DIR/PUB/LAB/014/001 dated February 5, 2021.”
“However, banks and other financial institutions are still prohibited from holding, trading, and/or transacting in virtual currencies on their account.”
President Muhammadu Buhari signed the budget bill into law on May 28, 2023.
The bill imposed a 10% tax on gains on the sale of digital assets, including cryptocurrencies.
Odey Otunu
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