The Central Bank of Nigeria Unbans Banks from Facilitating Digital Asset Transactions

Nigerias apex bank has unbanned Nigerian banks from facilitating crypto transactions after almost two years of enforcing a ban on their engagement with digital currencies. A few days ago, the Central Bank of Nigeria (CBN) sent a circular to banks, recognizing that the rise in global demand and adoption of crypto requires removal of the restrictions placed on financial institutions.

“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,” reads the circular.

According to the statement, current trends across the world have shown the necessity of regulating virtual assets service providers (VASPs) activities, including cryptos and crypto assets.

They are introducing guidelines meant to establish minimum standards and requirements for the establishment of banking relationships and opening accounts for virtual asset service providers (VASPs) in the country.

Furthermore, they are trying to facilitate powerful risk management practices across the banking industry as regards licensed VASPs activities. However, CBN emphasized that financial institutions are not allowed to trade, hold, or conduct transactions in crypto using their own accounts.

Participants in the Nigerian crypto space turned to peer-to-peer (P2P) platforms after the ban in 2021.