[NEWS] Central Bank of Nigeria lifts ban on financial institutions trading and intermediating crypto assets

The Central Bank of Nigeria (CBN) announced that it would suspend the ban on cryptocurrency (virtual currency) trading in the country. Reuters and other media reported on the 23rd.

In an announcement dated December 22nd, the Central Bank of Nigeria stated that "regulations need to be put in place" for cryptocurrencies and virtual asset service providers (VASPs).

In February 2021, the Central Bank of Nigeria banned banks and financial institutions from providing cryptocurrency trading services or brokerage services, taking into account the risks of money laundering and terrorist financing (ML/TF). However, in the future, it will be possible to provide bank accounts to cryptocurrency service providers by thoroughly implementing KYC (know your customer) and supervision.

In the announcement, the Bank of Nigeria announced new guidelines after touching on the FATF (Financial Action Task Force) rules on money laundering and terrorist financing.

The guidelines mention the need to thoroughly comply with KYC and conduct due diligence on transactions, and also include the obligation to report suspicious transactions or suspicious behavior to authorities. The government has issued a strict order to financial institutions and banks to implement strict management systems, stating that serious sanctions will be imposed in the event of a violation of the guidelines.

However, it appears that banks and financial institutions will still be prohibited from holding and trading crypto assets in their own accounts.

Nigeria, where cryptocurrency is hot, especially in person-to-person transactions

In Nigeria, banks and financial institutions are prohibited from providing services, but transactions between individuals are not prohibited. This was stated clearly by Godwin Emefiele, former governor of the Central Bank of Nigeria, in March 2021, who said, "We have prohibited banks from conducting cryptocurrency-related transactions, but we do not recall banning the use of crypto assets by individuals or others."

Nigeria is known worldwide for its high cryptocurrency trading and usage rate. According to the report "The 2023 Global Crypto Adoption Index" released in September this year by blockchain analysis company Chainalysis, Nigeria ranked second in the world after India in the overall index of cryptocurrency trading volume and other indicators. In particular, it is the world's top in person-to-person trading volume.

Reference:Reuters,Chainalysis Report
Image: Shutterstock

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