Nigeria’s Central Bank Eases Regulations for Banks Engaging in Cryptocurrency Transactions

Almost two years after imposing a broad ban on banks participating in digital currencies, the Central Bank of Nigeria (CBN) has reversed its stance, lifting constraints on Nigerian banks involved in cryptocurrency transactions. 

In a circular distributed to banks on December 22, the CBN acknowledged that the growing global demand and acceptance of cryptocurrencies render it unreasonable to uphold the strict restrictions imposed on financial institutions in 2021.

The statement noted:

“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.”

The guidelines aim to establish baseline standards and prerequisites for establishing banking relationships and opening accounts for virtual asset service providers (VASPs) in Nigeria. Furthermore, they seek to ensure robust risk management practices within the banking sector regarding the activities of licensed VASPs.

However, the statement underscores that financial institutions are still prohibited from holding, trading, or conducting transactions in cryptocurrency using their own accounts.

Meanwhile, in recent developments, the local blockchain industry has urged the federal government of Nigeria to implement regulations that facilitate the widespread integration of the approved blockchain policy in the country. Obinna Iwuno, the president of the Stakeholders in Blockchain Association of Nigeria (SiBAN), has recently emphasised the need to establish a regulatory framework to expedite the infusion of blockchain technology across various sectors of the economy.

“We are ready for full adoption now, and the blockchain policy initiated by the government positions Nigeria as a trailblazer in the continent’s digital economy landscape if fully implemented.”