The Central Bank of Nigeria (CBN) has instructed banks to dismiss the initial ban on cryptocurrency that was imposed two years ago. Haruna Mustapha, the Director of Financial Policy and Regulation at CBN, revealed this information through a circular issued on Friday.
The apex bank emphasized its commitment to aligning with global trends by providing guidelines and regulations for banks in managing cryptocurrency to prevent misuse. The directive encourages immediate compliance with the updated provisions.
FPR/DIR/PUB/CIR/002/003
CIRCULAR TO ALL BANKS AND OTHER FINANCIAL INSTITUTIONS
GUIDELINES ON OPERATIONS OF BANK ACCOUNTS FOR VIRTUAL ASSETS SERVICE PROVIDERS (VASPs)
While the CBN initially imposed restrictions in February 2021 due to concerns about money laundering and terrorism financing risks associated with cryptocurrency operations, recent global developments have led to a shift in approach.
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The Financial Action Task Force (FATF) updated its Recommendation 15 in 2018, urging the regulation of Virtual Assets Service Providers (VASPs) to prevent misuse of virtual assets for illicit activities. Subsequently, the Money Laundering (Prevention and Prohibition) Act, 2022, recognized VASPs as part of the definition of a financial institution.
The Securities and Exchange Commission (SEC) also contributed to the regulatory landscape by issuing Rules on Issuance, Offering, and Custody of Digital Assets and VASPS in May 2022.
In light of these developments, the CBN has issued new guidelines superseding previous circulars on the subject. While banks and financial institutions are still prohibited from holding, trading, and transacting in virtual currencies on their own account, they are now required to adhere to the provisions outlined in the updated Guidelines.
Haruna B. Mustafa
Director, Financial Policy and Regulation Department