In a significant development, the Central Bank of Nigeria (CBN) has decided to lift the ban on banks facilitating cryptocurrency transactions.
The long-awaited move comes two years after persistent calls from crypto enthusiasts and companies urging the apex bank to reconsider its stance.
The CBN has concurrently issued comprehensive guidelines for banks and other financial institutions engaging with entities offering crypto services.
The circular to these institutions explains that the decision to lift the ban is aligned with current global trends, emphasizing the necessity to regulate the activities of crypto companies.
One crucial aspect highlighted in the circular is the recognition of crypto companies, referred to as Virtual Asset Service Providers (VASPs), as financial entities under Section 30 of the Money Laundering Act of 2022.
This legal recognition underscores the growing importance of cryptocurrencies in the financial landscape.
The CBN also cited the guidelines released by the Nigerian Securities Exchange Commission (SEC) in 2022 as a contributing factor.
These guidelines outline the regulatory framework for crypto companies operating in Nigeria, adding another layer of support for the lifting of the crypto transaction restriction.
While banks are now permitted to facilitate crypto transactions, a key restriction remains in place – they are prohibited from trading, holding, or transacting in cryptocurrencies themselves.
The revised regulations outline specific activities that Nigerian banks are now allowed to undertake with crypto companies (VASPs).
Banks can open accounts for these companies, offer designated settlement accounts, and act as channels for foreign exchange flows and trade.
However, crypto companies seeking to utilize banking services must obtain a license from the SEC to operate.
The SEC’s regulations stipulate that VASPs, including crypto exchanges, must have a minimum paid-up capital of ₦500 million ($553,000) and must be duly registered with the Corporate Affairs Commission (CAC).
Additionally, crypto companies intending to issue tokens must submit a white paper to the SEC and await a 30-day review period to determine the launch viability in Nigeria.
To ensure compliance with stringent Know Your Customer (KYC) measures, banks are mandated to obtain the Bank Verification Number (BVN) of all directors and owners of crypto companies availing their services.
This pivotal development marks a significant stride towards a more regulated and inclusive crypto ecosystem in Nigeria, providing clarity for both financial institutions and crypto companies operating in the country.
