Just In: Two years later, CBN reportedly directs banks to disregard initial ban on cryptocurrency

The Central Bank of Nigeria (CBN) has directed banks to disregard the initial ban on cryptocurrency which the apex bank announced two years ago, Peoples Gazette is reporting.

Haruna Mustapha, CBN’s director of financial policy and regulation, disclosed this in a circular on Friday.

The apex bank said it is now providing guidelines and regulations for banks with regard to managing cryptocurrency in line with global trends to avoid its misuse, while urging banks to comply with the guidelines and regulations.

The statementreads: “The CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures.

However, current trends globally have shown that there is need to regulate the activities of virtual assets service providers (VASPs) which include cryptocurrencies and crypto assets. Following this development, the Financial Action Task Force (FATF) in 2018 also updated its Recommendation 15 to require VASPS to be regulated to prevent misuse of virtual assets for ML/TF/PF.

Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognizes VASPs as part of the definition of a financial institution. In addition, the Securities and Exchange Commission (SEC) in May 2022 issued Rules on Issuance, Offering and Custody of Digital Assets and VASPS to provide a regulatory framework for their operations in Nigeria

In view of the foregoing, the CBN hereby issues this Guidelines to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria.

The Guidelines supersedes the CBN’s circulars referenced FPR/ DIR/GEN/CIR/06/010 of January 12, 2017 and BSD/DIR/PUB/LAB/ 014/001 of February 5, 2021 on the subject. However, banks and other financial institutions are still prohibited from holding, trading and/or transacting in virtual currencies on their own account. Accordingly, all banks and other financial institutions are hereby required to immediately comply with the provisions of the Guidelines.