The Central Bank of Nigeria lifts ban on cryptocurrency transactions
The Central Bank of Nigeria (CBN) has reversed its previous prohibition on cryptocurrency transactions, signaling a significant change in the country’s stance on the crypto market. The ban was lifted through a circular dated December 22, 2023, and signed by Haruna Mustafa, the director of the financial policy and Regulation Department at CBN.
CBN issues guidelines for crypto transactions
The circular provides procedural guidelines for banks and financial institutions to facilitate crypto transactions. It focuses on account openings, foreign exchange inflows, and trade for firms dealing with crypto assets. This move aligns with the Financial Action Task Force’s recommendation to regulate Virtual Asset Service Providers (VASPs) in order to combat money laundering and terrorism financing.
Banks still restricted from crypto transactions
While individuals can now handle crypto transactions through their bank accounts, banks and financial institutions are still prohibited from independently trading or transacting in virtual currencies. Compliance with the new guidelines is mandatory and immediate.
Nigeria’s complex relationship with crypto
Nigeria has had a complicated history with cryptocurrencies. While it banned crypto transactions and flagged exchanges like Binance for operating illegally, it also pioneered its own central bank digital currency (CBDC) called the eNaira. However, the adoption of the eNaira has been slow, and there are concerns about its potential impact on Nigeria’s financial stability.
Hot Take: Nigeria embraces crypto while developing its own CBDC
The lifting of the ban on cryptocurrency transactions in Nigeria demonstrates a shift in the country’s attitude towards digital assets. By allowing individuals to engage in crypto-centric transactions through their bank accounts, Nigeria is providing more accessibility and convenience for investors. However, it is important to note that banks and financial institutions are still restricted from independent crypto trading. Nigeria’s complex dance with crypto reflects the global challenge of balancing innovation and regulation in the rapidly evolving digital currency landscape.
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