In a circular titled “Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPs),” dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003 and signed by the Director of the Financial Policy and Regulation Department, Haruna Mustafa, the Central Bank of Nigeria (CBN) has adjusted its regulations on cryptocurrency transactions, thereby reversing the apex bank’s earlier stance on the matter.
The CBN’s statement articulates: “The CBN, in February 2021, issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers due to the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations, as well as the absence of regulations and consumer protection measures.
“However, current trends globally have shown that there is a need to regulate the activities of virtual assets service providers (VASPs), which include cryptocurrencies and crypto assets. Following this development, the Financial Action Task Force (FATF) in 2018 also updated its Recommendation 15 to require VASPs to be regulated to prevent misuse of virtual assets for ML/TF/PF.”
The CBN Director further emphasizes: “Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022, recognizes VASPs as part of the definition of a financial institution.
“In addition, the Securities and Exchange Commission in May 2022 issued Rules on Issuance, Offering and Custody of Digital Assets and VASPs to provide a regulatory framework for their operations in Nigeria.
“In view of the foregoing, the CBN hereby issues this guideline to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria.”
The Apex bank further reinforces that this new status quo supersedes the old guidelines referenced as “FPR/DIR/GEN/CIR/06/010 of January 12, 2017,” and “BSD/DIR/PUB/LAB/014/001 of February 5, 2021,” on this subject, which mandated banks to cease dealing in cryptocurrencies or facilitating payments for crypto exchanges and close all accounts of customers within its purview engaged in such transactions as it was prohibited.
The CBN also restates that all FinTechs, financial institutions, and banks are prohibited from trading, holding, or transacting in virtual currency on their account, and they are strongly advised to adhere to this new policy immediately.
