The Central Bank of Nigeria (CBN) has lifted the restriction on crypto assets and urged banks to disregard the initial ban on cryptocurrency transactions.
CBN’s Director of Financial Policy and Regulation Department, Haruna Mustafa in a circular said current trends globally have shown the need for crypto regulation.
“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,” Mustafa said.
“However, current trends globally have shown that there is a 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 recognises VASPs as part of the definition of a financial institution.”
He noted that the Securities and Exchange Commission 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 guideline to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria,“ Mustafa said.
The CBN director said the new guideline supersedes its old ones referenced FPR/DIR/GEN/CIR/06/010 of January 12, 2017, and BSD/DIR/PUB/LAB/014/001 of February 5, 2021 that placed a restriction on cryptocurrency transactions under the previous government of President Muhammadu Buhari and former CBN governor Godwin Emefiele.
Mustafa , however, stated that banks and other financial institutions are still prohibited from holding, trading and/or transacting in virtual currencies on their own account.
He noted that all banks and other financial institutions are required to immediately comply with its new guideline.
THEGUARDIAN
