The Central Bank of Nigeria (CBN) has reversed its stance on digital currency transactions, marking a significant shift nearly three years after imposing a comprehensive ban on such activities. The move is seen as a notable show of support for the digital asset class.
The CBN has introduced new guidelines instructing banks to provide banking services to virtual asset service providers (VASPs). Under the latest directives, banks and other financial institutions are permitted to open accounts for VASPs, offer designated settlement accounts, and serve as channels for foreign exchange (FX) flows and trade.
However, VASPs must meet specific conditions before gaining access to banking services from commercial banks in Nigeria. Key requirements include approval from the Nigerian Securities and Exchange Commission (SEC) and evidence of registration with the Corporate Affairs Commission (CAC). Additionally, bank accounts for VASPs need explicit approval from a senior manager at the chosen financial institution. Notably, the rules maintain a firm stance against banks trading and holding digital currencies on their balance sheets.
The CBN attributed its shift in policy toward digital assets to several macroeconomic factors. The 2021 blanket ban failed to suppress the adoption of digital currencies, as millions of Nigerians turned to peer-to-peer exchanges to conduct digital asset transactions. The CBN also referenced Section 30 of the Money Laundering Act of 2022, recognizing VASPs as legitimate financial companies.
The latest regulations align with the Financial Action Task Force (FATF) recommendations, encouraging national financial regulators to implement tailored measures to prevent the misuse of digital currencies. The initial ban by the CBN cited concerns about the potential for virtual currencies to be used for terrorism financing and money laundering.
Stakeholders in Nigeria’s digital asset ecosystem anticipate that the new guidelines will drive increased adoption of the asset class. Collaborative efforts between VASPs and regulators to establish robust rules for the sector are also expected to rise. Digital asset firm Yellow Card expressed optimism about the regulatory framework, projecting a surge in user adoption and engagement in the coming months due to increased trust and confidence within the crypto space.
