BREAKING: CBN Lifts Ban On Cryptocurrency, See What Nigerian Banks Can Now Do With Crypto Companies

The Central Bank of Nigeria (CBN) has lifted the restriction on banks from facilitating crypto transactions.

VerseNews reports that this was disclosed in a circular dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, and signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa.

The circular titled, ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’ also provides guidelines for banks and other financial institutions when operating with entities that provide crypto services.

This directive is coming two years after crypto enthusiasts and companies yearned for the apex bank to lift the restriction.

“The CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures.

“However, current trends globally have shown that there is need to regulate the include providers (V/ASPs) which activities of virtual assets service cryptocurrencies and crypto assets. Following this development, the Financial Action Task Force (FATF) in 2018 also updated its Recommendation 15 to require VASPs to be regulated to prevent misuse of virtual assets for ML/TF/PF Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognizes VASPs as part of the definition of a financial institution.

“In addition, the Securities and Exchange Commission in May 2022 issued Rules on Issuance, Offering and Custody of Digital Assets and VASPs to provide a regulatory framework for their operations in Nigeria.

“In view of the foregoing, the CBN hereby issues this guideline to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria. “

What Nigerian banks are allowed to do with crypto companies

• Banks are now allowed to open bank accounts for crypto companies, also referred to as VASPs, provide them with designated settlement accounts, and act as channels for FX flows and trade.
• However, crypto companies that wish to use banks must have a licence issued to them by the SEC to operate.
• According to the SEC VASPs such as crypto exchanges will be required to pay a minimum paid-up capital of ₦500 million ($553,000) and must be registered duly with the CAC.
• Crypto companies that also wish to issue tokens must first submit a white paper to the SEC and wait 30 days to know if such tokens can be launched in Nigeria.
• Banks are also required to get the BVN of all the directors and owners of the crypto companies using its services. The guideline includes other stringent KYC measures before a VASP can have an account with a bank.

VerseNews understands that this directive is coming two years after crypto enthusiasts and companies yearned for the apex bank to lift the restriction.