The Central Bank of Nigeria (CBN) has decided to lift the restriction on banks facilitating crypto transactions, as revealed in a circular sent to financial institutions. CBN cites the necessity to regulate crypto companies in alignment with global trends.
The Central Bank of Nigeria (CBN) has decided to lift the restriction on banks facilitating crypto transactions, as revealed in a circular sent to financial institutions. CBN cites the necessity to regulate crypto companies in alignment with global trends. Section 30 of the Money Laundering Act of 2022 now officially recognizes crypto companies, termed virtual asset service providers (VASPs), as financial entities. The move is also influenced by guidelines set by the Nigerian Securities Exchange Commission (SEC) in 2022 for crypto companies operating in Nigeria.
In response to fervent appeals from the crypto community, CBN has not only lifted the ban but also issued comprehensive guidelines for banks and financial institutions engaging with entities offering crypto services. This marks a pivotal development occurring two years after the initial imposition of restrictions. Despite the allowance for banks to facilitate crypto transactions, they are expressly prohibited from trading, holding, or transacting cryptocurrencies.
Under the new directive, banks are granted permission to open accounts for crypto companies (VASPs), furnish them with designated settlement accounts, and serve as conduits for FX flows and trade. However, crypto companies wishing to engage with banks must possess a license issued by the SEC. According to the SEC, VASPs like crypto exchanges are required to maintain a minimum paid-up capital of ₦500 million and complete registration with the CAC. For those looking to issue tokens, submission of a white paper to the SEC is mandatory, with a 30-day waiting period to ascertain the feasibility of launching such tokens in Nigeria.
In adherence to stringent Know Your Customer (KYC) measures, banks must acquire the Bank Verification Number (BVN) of all directors and owners associated with the crypto companies availing their services. The comprehensive guidelines underscore the careful scrutiny applied before a VASP can establish an account with a bank.
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