The Central Bank of Nigeria (CBN) has lifted the comprehensive ban on banks engaging with crypto assets nearly two years after its enforcement. Abubakar, a prominent tech journalist, broke the news on the X platform, signaling a major shift in the country’s stance on cryptocurrencies.
The original ban, issued in 2021, prohibited banks from participating in any cryptocurrency-related transactions. However, the latest circular, sent to banks on December 22, introduces clear guidelines that support cryptocurrency transactions and emphasize stringent customer Know Your Customer (KYC) and anti-money laundering checks.
The circular, citing the powers conferred on the CBN by the Central Bank of Nigeria Act, 2007, and the Banks and Other Financial Institutions Act (BOFIA) 2020, outlines the objectives of the guidelines. These include setting minimum standards for banking business relationships with Virtual Assets Service Providers (VASPs), effectively monitoring activities related to SEC-licensed VASPs/Digital Assets entities, and providing guidance on account operations for licensed VASPs.
Crypto Guidelines Redefine Banking Landscape
The scope of the guidelines covers banks and financial institutions under the regulatory purview of the CBN. It complements existing anti-money laundering and counter-terrorism financing laws and regulations, ensuring effective risk management in the banking industry concerning licensed VASPs.
Eligible stakeholders under these guidelines include commercial and merchant banks, payment service providers involved in settlement for third parties, and entities registered by the Securities and Exchange Commission (SEC) to conduct digital/virtual asset services.
The permissible activities for financial institutions (FIs) in their operations for VASPs include opening designated accounts, providing settlement services, acting as channels for foreign exchange flows and trade, and any other activity permitted by the CBN.
The guidelines further outline the operation of bank accounts by VASPs, emphasizing the designation of accounts, adherence to AML, CFT, and CPF policies, and restrictions on using accounts for virtual/digital asset transactions only. Additionally, FIs are required to monitor and submit monthly reports to the CBN detailing the activities in designated accounts.
Transaction limits and the prohibition of concession agreements with account holders are also highlighted, ensuring that designated accounts remain subject to the maximum transaction charges as provided by the CBN Guide to Charges for Banks and Other Financial Institutions.
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