The Central Bank of Nigeria (CBN) has lifted its two-year ban on cryptocurrency transactions, replacing it with a set of stringent know-your-customer (KYC) and anti-money laundering (AML) regulations. This shift marks a significant departure from the CBN’s 2021 stance, which cited concerns over money laundering and terrorism financing as justification for the ban.
Analysts and industry players have largely welcomed the reversal, albeit with cautious optimism. Buchi Okoro, CEO of Quidax, a Nigerian crypto platform, views the new guidelines as a step towards increased transparency and investor protection. “People are going to gravitate towards licensed platforms, and very importantly, we would have fewer cases of customers losing money,” he stated.
The CBN’s guidelines outline a comprehensive framework for regulating crypto activity in Nigeria. Key requirements include:
- Banks requiring BVN verification: All directors and owners of crypto businesses utilizing banks for transactions must provide their Bank Verification Numbers (BVNs).
- SEC licensing for crypto companies: Cryptocurrency exchanges and related businesses must obtain a license from the Securities and Exchange Commission (SEC). This requirement coincides with SEC regulations issued in May 2022, mandating a ₦500 million minimum capital for Virtual Assets Service Providers (VASPs) and CAC registration.
- Token issuance oversight: Crypto companies seeking to issue tokens must submit a white paper to the SEC for a 30-day review before proceeding.
- Ban on bank involvement in crypto trading: Despite lifting the general ban, banks remain prohibited from holding, trading, or transacting in virtual currencies on their own accounts. Experts view this measure as a reasonable precaution given the volatility of crypto assets.
The CBN emphasizes that these guidelines align with global standards for regulating cryptocurrency use. While some industry voices may advocate for further liberalization, the current approach represents a pragmatic balance between fostering innovation and mitigating potential risks.
Looking ahead, the success of this new regulatory framework will hinge on its effective implementation and enforcement. As Nigeria navigates the evolving landscape of digital currencies, striking the right balance between fostering innovation and protecting its citizens will be crucial. Only time will tell whether this cautious embrace of crypto proves to be a catalyst for sustainable growth within the Nigerian financial ecosystem. Read More