Nigerian central bank lifts ban on crypto trading
Nigeria's central bank has reversed its ban on cryptocurrency transactions, acknowledging the necessity of regulating such activities in line with global trends. The Central Bank of Nigeria (CBN) had initially prohibited banks and financial institutions from engaging in crypto-related transactions in February 2021, citing concerns about money laundering and terrorism financing.
Last year, in May, Nigeria's Securities and Exchange Commission (SEC) introduced regulations for digital assets, indicating the country's attempt to strike a balance between an outright ban on crypto assets and unregulated use.
In a circular dated December 22, the CBN emphasized the global imperative of regulating virtual asset service providers (VASPs), encompassing cryptocurrencies and crypto assets. The guidelines outlined in the circular detail the procedures for banks and financial institutions, including the opening of accounts, providing designated settlement accounts, offering settlement services, and acting as channels for forex inflows and trade for entities involved in crypto assets.
To engage in crypto business, VASPs must obtain licensing from the Nigerian SEC. The CBN stated, "From the commencement of these Regulations, FI 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."
However, the circular maintains that banks are still prohibited from trading, holding, or transacting cryptocurrencies.
Nigeria, with its young and tech-savvy population, has witnessed widespread adoption of cryptocurrencies. The use of peer-to-peer trading on crypto exchanges has been popular among the population, providing an alternative to traditional financial services.
According to a September report by the New York-based blockchain research firm Chainalysis, the volume of crypto transactions in Nigeria saw a 9% year-over-year growth, reaching $56.7 billion between July 2022 and June 2023.
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