Nigeria’s Central Bank has officially lifted the ban on transacting in cryptocurrencies, marking a notable reversal of its stance on crypto assets.
The decision was conveyed through a circular dated December 22, where the Central Bank of Nigeria (CBN) acknowledged the global trend towards regulating virtual asset service providers (VASPs), including cryptocurrencies and crypto assets.
The initial ban, imposed in February 2021, had barred banks and financial institutions from engaging in or facilitating transactions involving crypto assets. The CBN cited concerns related to money laundering and terrorism financing risks as the primary reasons for the prohibition.
However, the latest circular indicates a shift in strategy, recognizing the need for regulatory frameworks for VASPs in line with global trends. The guidelines outlined in the circular detail the procedures for banks and financial institutions to open accounts, provide designated settlement accounts and settlement services, and serve as channels for forex inflows and trade for firms involved in crypto asset transactions.
Notably, VASPs will now be required to obtain licensing from the Nigerian Securities and Exchange Commission (SEC) to engage in cryptocurrency-related activities.
The CBN emphasized that financial institutions must adhere to these guidelines, and they are prohibited from trading, holding, or transacting in cryptocurrencies themselves.
The move comes after Nigeria’s Securities and Exchange Commission published regulations for digital assets in May of the previous year, indicating the country’s efforts to strike a balance between an outright ban on crypto assets and unregulated usage.
Nigeria’s youthful and tech-savvy population has shown a strong affinity for cryptocurrencies, utilizing peer-to-peer trading on crypto exchanges to navigate the financial sector independently.
A September report from New York-based blockchain research firm Chainalysis revealed a 9% year-over-year growth in crypto transactions in Nigeria, reaching $56.7 billion between July 2022 and June 2023. The regulatory adjustments are poised to reshape the crypto landscape in Nigeria, fostering a more structured and secure environment for digital asset transactions.
Meanwhile in Ghana, the prohibition of cryptocurrency for transaction is still in force, after the country’s Central Bank, in April 2022 issued cautionary directives to banks and other financial entities in their dealings in cryptocurrency trade and other unregulated investment schemes.
The move was to sanitize the digital space with respect to cryptocurrency.
