CBN Back-pedals, lifts ban on crypto-currency transactions

The Central Bank of Nigeria (CBN) has rescinded its ban on cryptocurrency transactions in the country, instructing commercial banks to disregard its previous directive regarding crypto transactions.

This information was conveyed through a circular titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’

Dated December 22, 2023, and bearing reference number FPR/DIR/PUB/CIR/002/003, the circular was signed by Haruna Mustafa, the Director of the CBN’s Financial Policy and Regulation Department.

The circular explains, “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.”

The circular cites the Financial Action Task Force (FATF), which, in 2018, updated its Recommendation 15 to require the regulation of VASPs to prevent the misuse of virtual assets for ML/TF/PF. Additionally, it notes that Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognizes VASPs as part of the definition of a financial institution.

The Securities and Exchange Commission, in May 2022, also issued rules to provide a regulatory framework for the operations of VASPs 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,” concludes the circular.