By Oluwatosin Maliki
In a significant development, the Central Bank of Nigeria has revoked the ban placed on crypto assets in the country, asking banks to disregard its earlier policy on crypto transactions.
To this effect, a circular dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, was signed by the apex bank’s Director, Financial Policy and Regulation Department, Haruna Mustafa.
The circular is titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’
The development indicates a shift from CBN’s initial position which restricts crypto transaction.
According to the financial regulator, the current trends globally have shown the need for crypto regulation.
The statement read, “The CBN, in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of 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 activities of virtual assets service providers (VASPs) which include 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,” the statement added.
“Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognises 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.”
“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 banking relationship with VASPs in Nigeria.”
The apex bank noted that this new guideline overrides its old ones referenced FPR/DIR/GEN/CIR/06/010 of January 12, 2017, and BSD/DIR/PUB/LAB/014/001 of February 5, 2021 on the subject.
Also, it affirmed that banks and other financial institutions are still prohibited from holding, trading and/or transacting in virtual currencies on their own account.
Hence, all banks and other financial institutions are required to immediately comply with its new guideline.
Recall, on February 5, 2021, the apex bank issued a circular with reference number BSD/DIR/PUB/LAB/014/001, reminding banks that dealing in crypto currencies or facilitating payments for cryptocurrency exchanges was prohibited.
During that time, it mandated all banks to identify persons or entities transacting in or operating crypto currency exchanges within their systems and ensure that their accounts were closed.