The recent report from Reuters states that the Central Bank of Nigeria has decided to revoke its ban on cryptocurrency transactions. The bank had previously banned banks and financial institutions from conducting crypto-related activities in February 2021 due to concerns about money laundering and terrorism financing.
This change aligns with the Nigerian Securities and Exchange Commission’s efforts to establish a regulatory framework for digital assets. Last year, the SEC released regulations for virtual assets, indicating Nigeria’s intention to strike a balance between banning crypto outright and allowing unregulated usage.
According to the new guidelines issued on Dec. 22, banks and financial institutions need to open designated accounts and provide settlement services for firms involved in cryptocurrencies and crypto assets. However, these institutions are still not allowed to directly trade, hold, or transact in cryptocurrencies.
Virtual Asset Service Providers wishing to operate in the crypto business must obtain a license from the Nigerian SEC. The circular issued by the CBN specifies that financial institutions must not open or operate any accounts for entities engaged in virtual/digital assets without proper designation and adherence to the new guidelines.
Nigeria’s cryptocurrency market has been growing, driven by a young and tech-savvy population. Despite regulatory challenges, Nigerians have increasingly turned to peer-to-peer crypto trading to sidestep restrictions in the financial sector. According to Chainalysis, Nigeria’s crypto transaction volume increased by 9% year-over-year, reaching $56.7 billion between July 2022 and June 2024.
