Nigerian Central Bank Sets Guidelines for Crypto Accounts
In December 2023, the Central Bank of Nigeria (CBN) reversed its ban on cryptocurrency trading, and now, banks have been given the green light to establish accounts with cryptocurrency exchanges and digital asset service providers.
Tight Constraints for VASPs
Regulations have been put in place to tightly control how these accounts can be used. Banks are now required to maintain separate naira-denominated accounts for virtual asset service providers (VASPs) and these accounts cannot be linked to personal or business accounts.
Focused Regulatory Framework
Under the new rules, banks must adhere to a focused regulatory framework, which includes maintaining naira-based accounts for digital asset service providers and prohibiting cash withdrawals from cryptocurrency accounts. Additionally, banks are not allowed to clear third-party checks through these accounts, and there is a limit of two withdrawals per quarter.
Impact on Nigerian Cryptocurrency Landscape
The new guidelines provide much-needed regulatory clarity for digital asset service providers. However, the restrictions imposed on cash withdrawals and limits on withdrawals may present challenges for users and startups in Nigeria’s cryptocurrency sector.
Hot Take: Nigerian Crypto Regulations—Good or Bad?
The Nigerian central bank’s decision to lift the ban on cryptocurrency trading and set guidelines for crypto accounts has both positive and negative implications. While it provides regulatory clarity, the restrictions on cash withdrawals and withdrawal limits may hinder the growth and innovation of the country’s cryptocurrency sector.
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