The Central Financial institution of Nigeria (CBN) has lifted the ban on cryptocurrency transactions within the nation in a major reversal of its earlier stance.
The change was introduced via a round on Dec. 22. It permits Nigerian banks and different monetary establishments to renew operations with cryptocurrency service suppliers.
The preliminary ban, imposed in February 2021, was primarily enacted over issues associated to cash laundering and terrorism financing dangers related to crypto belongings.
New pointers for crypto
Beneath the brand new pointers, monetary establishments at the moment are allowed to open accounts for companies dealing in digital/digital belongings, however these accounts have to be particularly designated for that function.
Banks and different monetary establishments should adjust to the necessities outlined within the CBN’s pointers when coping with accounts for crypto-related companies. In the meantime, Digital Asset Service Suppliers (VASPs) concerned within the crypto enterprise are required to be licensed by the Nigerian Securities and Trade Fee.
Whereas they will facilitate transactions for VASPs, banks, and monetary establishments are nonetheless barred from buying and selling, holding, or transacting in cryptocurrencies on their very own accounts.
The lifting of the ban is anticipated to considerably affect the Nigerian monetary panorama, given the nation’s younger, tech-savvy inhabitants that has proven a eager curiosity in cryptocurrencies.
Based on a report by Chainalysis, the amount of crypto transactions in Nigeria grew by 9% year-over-year to $56.7 billion between July 2022 and June 2023.
Whereas the lifting of the ban opens up alternatives, it additionally presents challenges in guaranteeing compliance with worldwide requirements for stopping unlawful actions. It underscores the necessity for a balanced strategy that encourages innovation whereas safeguarding towards dangers.
Shifting tides
Nigeria’s choice aligns with international shifts in direction of recognizing and regulating cryptocurrencies moderately than outright banning them. This displays an growing acknowledgment of the potential of digital belongings and the necessity for complete regulatory frameworks.
The Securities and Trade Fee in Nigeria issued guidelines in Could 2022 to offer a regulatory framework for digital belongings and VASPs.
The CBN’s pointers are according to worldwide suggestions, resembling these from the Monetary Motion Process Drive (FATF), to manage using digital belongings.
The FATF up to date its pointers in 2018, emphasizing the regulation of VASPs to stop the misuse of digital belongings for cash laundering and terrorism financing.
The brand new guidelines characterize a major step in acknowledging and integrating cryptocurrencies into Nigeria’s monetary system, balancing the necessity for innovation in digital belongings with regulatory oversight to make sure safety and compliance.
