The Central Bank of Nigeria (CBN) has introduced fresh regulatory guidelines governing cryptocurrency transactions conducted by Deposit Money Banks (DMBs) and other financial institutions.
This move follows the CBN’s earlier circular in February 2021, which imposed restrictions on banks’ involvement with cryptocurrency service providers due to concerns about money laundering, terrorism financing risks, and the absence of regulatory and consumer protection measures.
Former CBN Governor Godwin Emefiele recently lifted the ban on cryptocurrency transactions within the Nigerian banking system. However, the new guidelines, titled ‘Guideline On Operation of Bank Account For Virtual Assets Service Providers (VASPs),’ specify that banks and financial institutions remain barred from holding, trading, and transacting in virtual currencies on their own account.
The CBN emphasized that any violation of these regulations would incur a penalty of not less than N2 million. According to the guidelines, financial institutions are prohibited from opening or allowing the operation of accounts for virtual/digital assets unless explicitly designated for that purpose and compliant with the provided guidelines.
Transactions on these designated accounts must be solely for virtual/digital assets, with no allowance for cash withdrawals or clearance of third-party cheques. Withdrawals are limited to Managers’ Cheques or transfers to other accounts, excluding any cash withdrawal. Settlement of virtual/digital assets transactions is specified to occur through transfers to designated accounts.
The guideline also outlines the process for opening designated settlement accounts for Securities and Exchange Commission’s (SEC) VASPs/DA entities, with the CBN’s permission. These accounts will store all Naira positions related to transactions on VASP platforms, and they are not allowed to bear interest. Transaction details leading to settlements on these accounts will be accessible online in real-time to financial institutions.
In summary, the CBN’s latest guidelines aim to regulate and monitor cryptocurrency transactions, ensuring that financial institutions adhere to strict rules governing their involvement with virtual assets.
