The Central Bank of Nigeria has lifted the ban on banks facilitating cryptocurrency transactions and has issued guidelines for financial institutions engaging with entities providing crypto services.
This move comes two years after calls from crypto enthusiasts and companies for the apex bank to lift the restriction. According to a circular sent to banks and financial institutions, the CBN stated that the ban was lifted in response to global trends indicating a need to regulate the activities of crypto companies.
The CBN highlighted that Section 30 of the Money Laundering Act of 2022 now recognizes crypto companies, referred to as virtual asset service providers, as financial entities. Additionally, the release of guidelines for crypto companies by the Nigerian Securities Exchange Commission in 2022 was cited as another reason for lifting the restriction.
While banks are now permitted to facilitate crypto transactions, they are prohibited from trading, holding, or transacting in cryptocurrencies. Banks can open accounts for crypto companies, provide designated settlement accounts, and serve as channels for foreign exchange flows and trade. However, crypto companies must obtain a license from the SEC to operate if they wish to use banking services.
The SEC mandates VASPs, including crypto exchanges, to pay a minimum paid-up capital of ₦500 million ($553,000) and register duly with the Corporate Affairs Commission. Additionally, crypto companies intending to issue tokens must submit a white paper to the SEC and wait for 30 days to determine if the tokens can be launched in Nigeria.
Banks are required to obtain the Bank Verification Number of all directors and owners of crypto companies using their services. The guidelines also outline stringent Know Your Customer measures that VASPs must fulfil before having an account with a bank.
