Nigeria’s Central Bank Revokes Anti-Crypto Measures
Nigeria’s Central Bank (CBN) has recently reversed its strict regulations that prohibited banks from handling crypto-related transactions for almost two years. This decision comes as a response to the increasing global interest and adoption of cryptocurrencies.
CBN Imposes New Requirements
The CBN has introduced revised guidelines that establish standards and prerequisites for banking relationships with virtual asset service providers (VASPs). Banks are now required to collect the Bank Verification Number (BVN) of the management members of crypto businesses before setting up accounts. Crypto firms must also obtain licensing from the Nigerian Securities and Exchange Commission and register with the country’s Corporate Affairs Commission.
These guidelines aim to strengthen risk management protocols in the banking sector, specifically for licensed VASPs. Financial institutions are prohibited from holding cryptocurrency, trading, or conducting transactions using their own accounts.
Nigerian Banks Collaborate on cNGN Stablecoin
Several major Nigerian banks, including Access Bank, Sterling Bank, and First Bank, are working together to develop a new stablecoin called cNGN. This stablecoin will be backed by and pegged to the Nigerian naira, the country’s fiat currency. It is designed to complement the Nigeria eNaira, the central bank’s digital currency that has faced challenges in gaining widespread adoption.
“The major reason why the CBN allowed banks is because they want the financial system to support/facilitate blockchain technology and they know the cumbersome processes [the Nigerian] SEC designed to operate a digital service,” explained Olumide Adesina, a journalist.
Nigeria’s Crypto-Friendly Environment
Nigeria is recognized as one of the most crypto-friendly jurisdictions globally. It ranks second on the Global Crypto Adoption Index by Chainalysis and leads the African region in raw transaction volume. The country’s economic uncertainties have led many citizens to explore financial alternatives, contributing to the growing adoption of cryptocurrencies.
Hot Take: Nigeria Embraces Crypto as Central Bank Reverses Restrictions
Nigeria’s recent decision to revoke its stringent anti-crypto measures is a significant step towards embracing cryptocurrencies and blockchain technology. By allowing banks to handle crypto-related transactions and introducing new guidelines for virtual asset service providers, the Central Bank aims to support the growth of the crypto industry while implementing necessary risk management protocols. The collaboration among Nigerian banks to develop a stablecoin further demonstrates the country’s commitment to innovation in the digital currency space. As Nigeria continues to foster a crypto-friendly environment, it has the potential to become a leading hub for cryptocurrency adoption and technological advancements in Africa.
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