Following the removal of restrictions on banks operating accounts for virtual assets such as cryptocurrencies, the Central Bank of Nigeria has instructed financial institutions in the country not to allow holders of crypto bank accounts to withdraw cash or issue a third-party cheque.
In a guideline published by the apex bank, issuance of third party cheques by accounts linked to virtual assets would also not be allowed as only transfers into other or designated accounts would be approved.
“No cash withdrawal shall be allowed from the account. No third-party cheque shall be cleared from the account.
“Except for settlement of a virtual/digital assets transaction which shall be done through a transfer to another designated account, the withdrawal shall be only through a managers’ cheque or transfer to an account,” the CBN said in its new Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers.
NewsBand reported last month that the central bank lifted the ban on cryptocurrency transactions through banks in the country after it was banned over two years by former President Muhammadu Buhari’s administration.
The ban on virtual and digital asset transactions was announced in February 2021, after the government accused some youths of funding #Endsars protest in the country in October 2020 through cryptocurrencies.
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After the CBN action in 2021, crypto traders in Nigeria immediately switched to peer-to-peer (P2P) trading through recognised cryptocurrency exchanges like Binance and others.
However, the suspension of the ban, according to the central bank, was done because “Nigeria can no longer afford to keep pushing digital assets underground, for obvious economic and security reasons, especially when you are number one in crypto adoption in Africa and a leading market in the globe.”
It has agreed to allow Nigerians to play big in the crypto market under some guidelines.
It said, “From the commencement of these regulations, financial institutions shall not open or permit the operation of any account by any person or entity to conduct the business of virtual/digital assets unless that account is designated for that purpose and opened in line with the requirement of these guidelines.
“The designated account shall only be opened with the approval of senior management of the FI.”
The guideline also stipulates that banks and financial institutions “shall monitor on a continuous basis, all activities carried out in designated accounts opened in accordance with these guidelines. Financial institutions shall at the end of every month not later than the 10th of the following month submit to the relevant supervisory department the CBN data and other information on designated accounts.”
Thus, banks and financial institutions are expected to submit on a monthly basis, the number of accounts opened, the value and volume of transactions on each account, details of the counter parties to the transactions, incidence of fraud or theft as well and number of customer complaints and remedial measures taken.