Nigeria’s central bank has decided to allow people to use cryptocurrencies again. They mentioned in their recent announcement that they noticed a growing trend worldwide, indicating the importance of regulating such transactions.
In February 2021, the Central Bank of Nigeria (CBN) made a rule that banks and financial institutions couldn’t be involved with or help in transactions using crypto assets. They mentioned concerns about money laundering and the financing of terrorism as reasons for this decision.
Regulatory Changes in Nigeria’s Cryptocurrency Landscape
In February 2021, Nigeria’s Central Bank (CBN) prohibited banks and financial institutions from engaging in crypto asset transactions, citing concerns about money laundering and terrorism financing risks.
Later, in May of the same year, the Securities and Exchange Commission (SEC) published regulations for digital assets, indicating Nigeria’s attempt to strike a balance between an outright ban and unregulated use of crypto assets.
Fast forward to December 22, the CBN issued a circular recognizing the global need to regulate virtual asset service providers (VASPs), encompassing cryptocurrencies and crypto assets. The guidelines outline how banks and financial institutions should handle accounts, settlement services, and forex transactions related to crypto assets.
According to the regulations, VASPs must obtain a license from the Nigerian SEC to operate in the crypto business. The CBN emphasized that financial institutions should not open or allow the operation of any account for virtual/digital assets unless it aligns with the guidelines.
However, the circular maintained the prohibition on banks trading, holding, or transacting in cryptocurrencies. Despite this restriction, Nigeria’s tech-savvy population has enthusiastically embraced cryptocurrencies, utilizing peer-to-peer trading on crypto exchanges to sidestep traditional financial channels.
A September report by 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.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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