Nigeria's central bank has reversed its ban on cryptocurrency transactions, acknowledging the necessity of global regulatory trends. Initially imposed in February 2021 due to concerns about money laundering and terrorism financing, the Central Bank of Nigeria (CBN) has now recognized the need to regulate virtual asset service providers (VASPs), including cryptocurrencies.
In a circular dated December 22, the CBN outlined guidelines for banks and financial institutions to engage with crypto assets. These regulations specify the opening of designated accounts, settlement services, and acting as conduits for forex inflows and trade related to crypto assets. VASPs must obtain licensing from the Nigerian Securities and Exchange Commission (SEC) to participate in the crypto business.
The CBN emphasized that, in compliance with the new regulations, financial institutions should not allow the operation of accounts for virtual/digital assets unless designated for that specific purpose. However, the ban on banks trading, holding, or transacting cryptocurrencies remains in place. This development signals Nigeria's ongoing efforts to strike a balance between regulating crypto activities and addressing associated risks.