The Central Bank of Nigeria (CBN) has removed the ban on cryptocurrency transactions that it had imposed two years ago in the country's banking system.
The CBN, through a circular from Haruna Mustapha, its director of financial policy and regulation, announced the change in policy. Mustapha mentioned that the apex bank would now give guidelines to financial institutions on how to handle cryptocurrency to prevent misuse.
In February 2021, the CBN issued a circular restricting banks and financial institutions from providing services to cryptocurrency providers. The decision was made by the then CBN Governor, Godwin Emefiele, due to concerns about money laundering, terrorism financing risks, and the lack of regulation and consumer protection in cryptocurrency operations.
Mustapha highlighted global trends indicating the need to regulate Virtual Assets Service Providers (VASPs), including cryptocurrencies. He said that the Financial Action Task Force (FATF) updated its recommendations to require VASPs to be regulated.
In response to these developments, the CBN issued new guidelines superseding the previous circular from February 5, 2021.
Mustapha, however, emphasised that banks and financial institutions are still not allowed to hold, trade, or transact in cryptocurrencies on their own account.
Cryptocurrency usage in Nigeria has been growing, with a 9 per cent year-over-year increase in transaction volume to $56.7 billion between July 2022 and June 2023. This growth is attributed to increasing interest in bitcoin and stablecoins, especially during periods of significant drops in the value of the naira. The report also noted a rise in crypto use in Uganda and a decline in Kenya during the same period.
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