The Central Bank of Nigeria (CBN) at the weekend said it has lifted ban on cryptocurrency transactions in the Nigerian banking system.
The CBN disclosed this in a circular signed by Haruna Mustapha, its Director, Financial Policy and Regulation, adding that the apex bank would now provide regulations for financial institutions on how to manage cryptocurrency to avoid misuse.
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.
“The current global trends 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) also updated its recommendation to require VASPs to be regulated, to prevent misuse of virtual assets.
“In view of the foregoing, the CBN hereby issues this guidelines to provide guidiance to financial institutions under its regulatory purview in respect of their relationship with VASPs in Nigeria.
“The guidelines supersedes the CBN circular of February 5, 2021 on the subject,” the director said.
He, however, warned that banks and other financial institutions were still prohibited from holding, trading or transacting in cryptocurrencies on their own account.