The Central Bank of Nigeria (CBN) has lifted the ban on banks operating accounts for cryptocurrency service providers in the country. The decision comes after a December 22 circular was sent to banks, allowing affected financial institutions to open accounts for Virtual Assets Service Providers (VASPs) registered with the Securities and Exchange Commission (SEC).
The CBN had imposed a ban on crypto trading activities in February 2021, leading to the closure of related bank accounts. This move was driven by concerns about unregulated cryptocurrencies facilitating money laundering and financing terrorism. The ban had a substantial impact on Nigeria’s rapidly growing crypto market, causing disruptions for users trying to buy and sell assets.
Central Bank of Nigeria Embracing Global Crypto Trends
Recognizing the global recognition and adoption of crypto assets, the CBN has shifted its stance. The central bank has issued guidelines to establish compliant relationships between banks and VASPs. Haruna Mustafa, the director of the Financial Policy and Regulation Department, emphasized that these guidelines supersede previous circulars, reflecting the need for updated regulatory measures.
While banks and affected financial institutions can now open designated accounts for VASPs, they are still prohibited from holding, trading, or transacting cryptocurrencies from these accounts. This cautious approach aims to balance the embrace of crypto services with the need for regulatory control.
Nigeria’s Thriving Crypto Sector
Despite regulatory challenges, Nigeria’s local crypto sector continues to flourish. A September survey by Web3 software company Consensys revealed that Nigeria leads in crypto awareness globally, with 99% of citizens aware of the asset class and 91% expressing willingness to invest.
In parallel with crypto developments, the Nigerian Federal Ministry of Communications and Digital Economy (FMCDE) approved the National Blockchain Policy earlier this year. This approval signals a strategic move towards the formal utilization of blockchain technology in the country, aligning with broader global trends in digital innovation.