The Central Financial institution of Nigeria (CBN) has lifted the ban on cryptocurrency transactions within the nation in a big reversal of its earlier stance.
The change was introduced by way of 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
Underneath the brand new pointers, monetary establishments are actually allowed to open accounts for companies dealing in digital/digital belongings, however these accounts have to be particularly designated for that objective.
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 Change 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 impression the Nigerian monetary panorama, given the nation’s younger, tech-savvy inhabitants that has proven a eager curiosity in cryptocurrencies.
In line with 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 making certain compliance with worldwide requirements for stopping unlawful actions. It underscores the necessity for a balanced strategy that encourages innovation whereas safeguarding in opposition to dangers.
Shifting tides
Nigeria’s resolution aligns with world shifts in direction of recognizing and regulating cryptocurrencies moderately than outright banning them. This displays an rising acknowledgment of the potential of digital belongings and the necessity for complete regulatory frameworks.
The Securities and Change Fee in Nigeria issued guidelines in Could 2022 to offer a regulatory framework for digital belongings and VASPs.
The CBN’s pointers are consistent with worldwide suggestions, similar to these from the Monetary Motion Process Power (FATF), to manage the usage of digital belongings.
The FATF up to date its pointers in 2018, emphasizing the regulation of VASPs to forestall the misuse of digital belongings for cash laundering and terrorism financing.
The brand new guidelines characterize a big 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.