Nigeria ends years-long restrictions on #crypto transactions

In a major shift from its prior position, the Central Bank of Nigeria (CBN) has lifted the prohibition on cryptocurrency transactions in the nation.

On December 22, the modification was made public through a circular. This enables banks and other financial institutions in Nigeria to carry on with their business dealings with bitcoin service providers.

The original prohibition, which went into effect in February 2021, was mainly implemented because to worries about the hazards of money laundering and terrorism financing connected to cryptocurrency holdings.

New guidelines for crypto-

Financial institutions may now open accounts for companies that trade in virtual or digital assets under the new regulations, but these accounts must be made expressly for that reason.

When handling accounts for companies involved in the #cryptocurrency space, banks and other financial institutions are required to adhere to the policies specified in the CBN's instructions.

Virtual Asset Service Providers (#VASPs ) operating in the cryptocurrency space must obtain a licence from the Nigerian Securities and Exchange Commission in the interim.

Banks and other financial institutions are still not allowed to trade, hold, or conduct cryptocurrency transactions on their own accounts, even though they can help VASPs with their transactions.

Given that the majority of Nigeria's population is young, tech-savvy, and has demonstrated a strong interest in cryptocurrencies, the removal of the prohibition is anticipated to have a substantial impact on the financial landscape of the nation.

According to a report by Chainalysis, the volume of crypto transactions in Nigeria grew by 9% year-over-year to $56.7 billion between July 2022 and June 2023.

While the lifting of the ban opens up opportunities, it also presents challenges in ensuring compliance with international standards for preventing illegal activities. It underscores the need for a balanced approach that encourages innovation while safeguarding against risks.