The Central Bank of Nigeria has changed its stance on cryptocurrencies in the country and urged banks to ignore the previous ban on cryptocurrency transactions.

jerrymusa.com reports that it is in accordance with the circular dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, signed by the Director of Financial Policy and Regulation of the Apex Bank, Haruna Mustafa.

The circular is titled “Circular to all banks and other financial institutions: Guidelines for bank account operations for virtual asset providers (VASPS)”.

Apex Bank said that current trends across the world have shown the need for regulation of cryptocurrencies.

He said: “In February 2021, the CBN issued a circular prohibiting banks and other financial institutions from maintaining accounts for cryptocurrency service providers due to the risk of money laundering and terrorist financing (BC/FT) and the vulnerabilities inherent in their operations such as the lack of regulatory and consumer protection measures.

“However, recent trends around the world have shown that there is a need for regulation of Virtual Asset Service Providers (VASPs) that include cryptocurrencies and crypto-assets.” Following this development, the Financial Action Task Force ( FATF) also updated its Recommendation 15 in 2018 to require that VASPS regulations prevent the misuse of virtual assets for the purposes of money laundering or terrorist financing/PF.

“Moreover, in art. 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 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 above, the CBN issues these guidelines to provide guidance to financial institutions within its regulatory jurisdiction on their banking relationships with VASPs in Nigeria.”

Apex Bank acknowledges  new guidelines

Apex Bank has acknowledged that these new guidelines supersede the previous ones contained in documents FPR/DIR/GEN/CIR/06/010 dated January 12, 2017 and BSD/DIR/PUB/LAB/014/001 dated February 5 were mentioned in 2021.

It was also confirmed that banks and other financial institutions remain prohibited from holding, exchanging and/or transacting virtual currencies on their own account.

He added that all banks and other financial institutions are required to immediately comply with the new guidelines.

In Circular No. BSD/DIR/PUB/LAB/014/001 dated February 5, 2021, the apex bank reminded banks that they are prohibited from dealing in cryptocurrencies or facilitating payments on cryptocurrency exchanges.

At the time, it required banks to identify individuals or organizations that were processing or operating cryptocurrency exchanges on their systems and ensure the closure of their accounts.