Nigeria’s Central Bank Revises Crypto Policies and Bans Their Use
The CBN issued a circular outlining regulations for VASPs, or virtual asset service providers.
Circular No. 22 from the Central Bank of Nigeria (CBN) about virtual asset service providers (VASPs) was sent out to all OFIS in Nigeria on Friday, December 22. The circular that Haruna Mustapha, the director of the division in charge of financial policy and regulation at the central bank, signed indicated a change from the CBN’s initial position, which restricted crypto transactions.
Citing global trends, the CBN has updated its regulations to allow OFIs and banks to provide services to crypto users. In one part of the circular, it was stated:
“The necessity to control the operations of VASPs, or virtual asset service providers, has been highlighted by recent developments on a global scale, and this includes crypto assets and cryptocurrencies.”
Banks and other financial institutions were prohibited from opening accounts for crypto service providers in a circular announced in February 2021 by the CBN. The regulator pointed to the challenges and dangers of money laundering and terrorist financing (ML/TF) as reasons for its decision, as well as the lack of consumer protection safeguards and legislation.
The Central Bank of Nigeria (CBN) has issued a circular outlining regulations for banking connections with VASPs in Nigeria, which it hopes to enforce among the financial institutions it oversees. The organization also stated that the new rules supersede its circulars from 2017 and 2021 on the subject. Nevertheless, the authority has issued a warning to all domestic financial institutions that they are not permitted to store, deal with, or do business using virtual currency.
Crypto enthusiasts are ecstatic about the most recent announcement from the Nigerian regulator. According to one X user, the CBN has charted a new route for the cryptocurrency market. According to the user, this is a watershed moment in financial innovation, when conventional banking and the cryptocurrency industry are merging to create a new landscape for regulated digital asset services that are both safe and convenient.