By Sabiu Abdullahi
A dramatic change of policy has surfaced as the Central Bank of Nigeria (CBN) reversed its two-year ban on cryptocurrency transactions, issuing new guidelines that welcome Virtual Asset Service Providers (VASPs) into the mainstream financial system.
A circular, released on Friday with reference number FPR/DIR/PUB/CIR/002/003, acknowledges the evolving global landscape regarding digital assets and underscores the need for “regulation to prevent misuse of virtual assets for money laundering and terrorism financing.”
This marks a significant departure from the February 2021 ban, which prohibited banks from facilitating any transactions involving cryptocurrencies.
The CBN had previously cited concerns over financial instability, lack of regulation, and potential criminal activity as reasons for the restriction.
However, the new guidelines acknowledge several developments that have prompted the policy change.
These include the fact that the Financial Action Task Force (FATF) updated its recommendations in 2018, mandating VASP regulation to combat financial crime.
The CBN circular outlines specific guidelines for banks engaging with VASPs, emphasizing the importance of customer due diligence, transaction monitoring, and compliance with anti-money laundering and counter-terrorism financing (AML/CFT) regulations.
This policy shift is likely to be met with enthusiasm by Nigeria’s burgeoning crypto community, which has long advocated for regulatory clarity and access to traditional financial services.
Experts foresee a surge in cryptocurrency adoption and the emergence of a vibrant domestic digital asset market under the new framework.
However, some concerns remain regarding the effectiveness of the proposed regulations and their potential impact on financial stability. The CBN’s ongoing collaboration with the SEC and other relevant stakeholders will be crucial in ensuring a robust and responsible crypto ecosystem in Nigeria.
Your reaction