Updated on December 24, 2023
The Central Bank of Nigeria (CBN) has made a significant shift in its approach to cryptocurrency transactions, lifting a ban that has been in place since February 2021.
In a circular dated December 22, 2023, the CBN emphasized the global trend towards crypto regulation, marking a departure from its previous concerns about money laundering and terrorism financing risks. The circular, titled ‘Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ outlines the need to regulate virtual asset service providers, including cryptocurrencies and crypto assets.
This reversal follows Nigeria’s Securities and Exchange Commission (SEC) introducing regulations for digital assets in May 2022. The CBN’s new guidelines replace earlier directives and outline procedures for banks and financial institutions dealing with virtual asset service providers. While banks are still prohibited from holding, trading, or transacting in virtual currencies, they must comply with the updated guidelines that allow them to deal trusted with crypto wallets in Nigeria.
Crucially, the circular highlights the requirement for VASPs to be licensed by the Nigerian SEC to engage in crypto business. The move aims to strike a balance between regulating crypto activities and embracing the popularity of cryptocurrencies among Nigeria’s tech-savvy population.
Despite the previous ban, Nigeria has seen a surge in crypto transactions, with a 9% year-over-year growth to $56.7 billion reported between July 2022 and June 2023. This regulatory shift signals a new chapter for Nigeria’s crypto landscape, encouraging compliance and offering clearer guidelines for virtual asset service providers.
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