The Central Bank of Nigeria (CBN) has made a groundbreaking decision to lift the ban on cryptocurrency transactions within the Nigerian banking system. This pivotal move, announced through a circular by Haruna Mustapha, Director of Financial Policy and Regulation at the CBN, signals a significant policy shift.
The ban, initially imposed in February 2021, prohibited banks and other financial institutions from engaging in transactions with cryptocurrency service providers. The then CBN governor, Godwin Emefiele, cited concerns regarding money laundering, terrorism financing, and the overall vulnerability and lack of regulation in the cryptocurrency space as the key reasons behind the blanket ban.
However, the recent circular from the CBN, issued by Mustapha, outlines the regulator’s intention to provide guidance on how financial institutions can prudently manage cryptocurrency activities to mitigate potential misuse. Mustapha emphasized the necessity to regulate the activities of Virtual Assets Service Providers (VASPs), encompassing cryptocurrencies and crypto assets, aligning with evolving global trends and recommendations from the Financial Action Task Force (FATF).
This progressive stance is underpinned by the recognition that the landscape surrounding virtual assets has evolved, necessitating a pragmatic approach to regulation. The CBN’s issuance of new guidelines overrides the previous circular from 2021, marking a paradigm shift in the regulatory approach to cryptocurrency within the Nigerian financial system.
It’s important to note that while the ban on banks and financial institutions holding, trading, or transacting in cryptocurrencies on their own account remains in place, the decision to lift the blanket ban on cryptocurrency transactions underscores the CBN’s responsiveness to the shifting dynamics of the global financial landscape.
The lifting of the ban holds profound implications for the cryptocurrency industry in Nigeria, signifying a new chapter that could potentially spur innovation and investment in the digital asset space. As Nigeria stands poised to navigate this new regulatory landscape, stakeholders are primed to adapt to the revised guidelines, ushering in a new era for cryptocurrency in the country.
