Nigeria’s Central Bank Introduces New Regulations for VASPs
The Central Bank of Nigeria (CBN) has implemented strict regulations to govern banks and financial institutions that offer accounts for virtual assets service providers (VASPs). The move aims to protect investors and the economy by aligning with global crypto regulations. In response to the Financial Action Task Force (FAFT) directive and the lifting of the ban on cryptocurrency transactions, national authorities have established an operational framework.
CBN Sets Tough Rules
The new guidelines permit crypto firms to open bank accounts in Nigeria solely for digital asset transactions. Cash withdrawals and third-party cheques are prohibited, except for crypto transactions, which require a manager’s cheque. Financial institutions must conduct risk assessments for transaction limits and provide regular reports to the CBN. Due diligence requirements, including anti-money laundering measures, address verification, and validation, are also mandated.
Nigeria’s Evolving Stance on Crypto
The CBN’s regulations aim to establish minimum standards for banking relationships with VASPs and monitor registered companies through regulatory agencies like the Securities and Exchange Commission (SEC). While Nigeria previously restricted financial services for crypto companies due to concerns about cyber crimes and money laundering, it has since softened its stance. The country now recognizes digital assets as an asset class and joins other nations like South Africa and Botswana in releasing crypto guidelines.
Hot Take: Stricter Regulations Reflect Growing Global Trend
Nigeria’s Central Bank is following a global trend by implementing stricter regulations for financial institutions dealing with VASPs. These regulations aim to protect investors and prevent misuse of cryptocurrencies. By setting operational frameworks aligned with global standards, Nigeria is positioning itself as a responsible participant in the crypto industry. While these regulations may create some limitations for crypto firms, they also contribute to the overall stability and legitimacy of the crypto market. As more countries adopt similar measures, the crypto industry can expect increased scrutiny and regulation to ensure compliance and mitigate risks.
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