Crypto ecosystem stakeholders have stated that regulating cryptocurrencies will provide new tax income for the government.
The PUNCH reported that they spoke after the Central Bank of Nigeria lifted the prohibition on cryptocurrency transactions in a circular issued on Friday. The banking authority has already instructed all banks to refrain from engaging with cryptocurrency businesses in 2021.
The central bank directed banks to disregard its previous stance on cryptocurrency in a circular dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, and signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa.
The circular, titled ‘Circular to all banks and other Financial Institutions rules on operations of bank accounts for Virtual Assets Service Providers,’ detailed the CBN’s evolving attitude on digital currency in response to current global trends.
According to the report, “The CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures.”
“In addition, the Securities and Exchange Commission issued rules on the issuance, offering, and custody of digital assets and VASPs in May 2022 to provide a regulatory framework for their operations in Nigeria,” it continued.
The apex bank highlighted in its new guideline that its new guideline superseded its old ones referenced FPR/DIR/GEN/CIR/06/010 of January 12, 2017, and BSD/DIR/PUB/LAB/014/001 of February 5, 2021 on the subject.
It also said that banks and other financial organizations were still forbidden from owning, trading, or transacting in virtual currency.
According to the Founder and Coordinator of the Blockchain Nigeria User Group, Chimezie Chuta, this latest move is a good one.
“Even though it is late, we believe it is a step in the right direction as an industry. It is also beneficial to the economy since now that there is regulation, the government will be able to tax it, as well as regulators and policymakers makers will be able to take pride in the fact that they have taken a step in the right direction.”
He did, however, point out that the new guidelines include requirements that the Securities and Exchange Commission must follow in order for things to run smoothly.
The Lead Partner and Head of Blockchain and Virtual Assets Practice at Infusion Lawyers, Senator Ihenyen, stated that by regulating virtual assets rather than opposing them, the CBN and other authorities were in a much better position to protect the financial system’s soundness and safety.
“Fortunately, our regulators will now work together to ensure consumer protection and investor safety.
“Nigeria can no longer afford to keep pushing digital assets underground for clear economic and security reasons, especially since it is the leader in crypto adoption in Africa and a global market leader.”
“The CBN has adopted a regulatory approach that focuses on financial institutions that are directly under its regulatory purview, not necessarily VASPs,” he noted.
“Effectively, financial institutions will now be responsible for ensuring that their VASP customers follow the relevant rules.”
According to the CEO of the Centre for the Promotion of Private Enterprises, Muda Yusuf, the CBN must guarantee an effective regulatory framework to reduce money laundering issues.
