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 by a circular 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 property.
New pointers for crypto
Underneath the brand new pointers, monetary establishments are actually allowed to open accounts for companies dealing in digital/digital property, however these accounts should be particularly designated for that goal.
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’ll 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 quantity 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 in opposition to dangers.
Shifting tides
Nigeria’s determination aligns with international shifts in direction of recognizing and regulating cryptocurrencies quite than outright banning them. This displays an rising acknowledgment of the potential of digital property and the necessity for complete regulatory frameworks.
The Securities and Trade Fee in Nigeria issued guidelines in Could 2022 to supply a regulatory framework for digital property and VASPs.
The CBN’s pointers are according to worldwide suggestions, akin to these from the Monetary Motion Activity Drive (FATF), to control using digital property.
The FATF up to date its pointers in 2018, emphasizing the regulation of VASPs to forestall the misuse of digital property for cash laundering and terrorism financing.
The brand new guidelines signify a major step in acknowledging and integrating cryptocurrencies into Nigeria’s monetary system, balancing the necessity for innovation in digital property with regulatory oversight to make sure safety and compliance.