CBN Bans Its Prohibition On Bitcoin Transactions

The Nigerian Central Bank has modified its position on cryptocurrency assets within the nation and requested that banks ignore its previous prohibition on cryptocurrency transactions.

According to Peoples Gazette, the Central Bank of Nigeria (CBN) has ordered banks to ignore the initial prohibition on cryptocurrencies that the top bank declared two years ago.

This was revealed in a circular on Friday by CBN's director of financial policy and regulation, Haruna Mustapha.

The top bank stated that in order to prevent cryptocurrency from being abused, it is now offering guidelines and regulations to banks on how to manage cryptocurrency in accordance with worldwide trends. The bank also urged banks to abide by these guidelines and regulations.

The statement says: “The CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing (ML/ TF) risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures.

“However, current trends globally have shown that there is need to regulate the activities of virtual assets service providers (VASPs) which include cryptocurrencies and crypto assets. Following this development, the Financial Action Task Force (FATF) in 2018 also updated its Recommendation 15 to require VASPS to be regulated to prevent misuse of virtual assets for ML/TF/PF.

“Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognizes VASPs as part of the definition of a financial Institution. In addition, the Securities and Exchange Commission (SEC) in May 2022 issued Rules on Issuance. Offering and Custody of Digital Assets and VASPS to provide a regulatory framework for their operations in Nigeria. 

“In view of the foregoing, the CBN hereby issues this Guidelines to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria.

“The Guidelines supersedes the CBN's circulars referenced FPR/ DIR/GEN/CIR/06/010 of January 12, 2017 and BSD/DIR/PUB/LAB/ 014/001 of February 5, 2021 on the subject. However, banks and other financial institutions are still prohibited from holding, trading and/or transacting in virtual currencies on their own account.

“Accordingly, all banks and other financial institutions are hereby required to immediately comply with the provisions of the Guidelines.”