In a significant policy shift, the <a href="https://www.cryptoknowmics.com/news/nigerian-central-bank-publishes-draft-guidelines-on-digital-currency/">Central Bank of Nigeria</a> (CBN) has lifted the ban on banks operating accounts for cryptocurrency service providers and users, almost three years after its initial restriction. Despite this, the apex bank maintains restrictions on direct transactions involving virtual assets by financial institutions.
<h2>Guidance for a New Era: Circular from CBN</h2>
CBN's Director of the Financial Policy and Regulation department, Haruna Mustafa, issued a circular announcing the uplifting news. The apex bank outlined that it has provided guidelines for financial institutions under its regulatory purview, offering clear direction on their banking relationships with Virtual Assets Service Providers (VASPs) in Nigeria.

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<h2>History of Restriction: CBN's Earlier Stance</h2>
This move comes after the CBN's previous circular in February 2021, where it restricted banks and financial institutions from operating accounts for cryptocurrency service providers. The initial restriction was grounded in concerns about money laundering and terrorism financing risks associated with cryptocurrency operations, coupled with the absence of robust regulations and consumer protection measures.
<h2>Global Trends and Regulatory Necessity: CBN's Rationale</h2>
The recent circular emphasizes the evolving global landscape, noting the necessity to regulate the activities of Virtual Assets Service Providers (VASPs), encompassing cryptocurrencies and crypto assets. The Financial Action Task Force (FATF) updated its Recommendation 15 in 2018, urging the regulation of VASPs to prevent the misuse of virtual assets for money laundering, terrorism financing, and proliferation financing.
<h2>Legal Recognition and Future Steps: CBN's Position</h2>
Furthermore, the circular highlights Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022, recognizing VASPs as part of the definition of a financial institution. This move aligns with international standards and reflects the acknowledgment of the role VASPs play in the financial ecosystem.

As Nigeria takes this regulatory leap in response to global shifts, the crypto community and financial institutions await further developments and clarifications on the practical implementation of these updated guidelines.

CBN Lifts Cryptocurrency Account Ban: A Regulatory Shift

Explore the regulatory turnaround as Central Bank of Nigeria reverses the cryptocurrency ban, issuing guidelines for Virtual Assets Service Providers.

Sujit received his Bachelors in Science from the LNMU Darbhanga. He is currently working as a Content Strategist. He has more than three years of professional experience in information systems, security policies, technologies, and Cryptocurrency. He has published 6 books in the area of information security and assurance. He has published more
than 50 research articles in leading journals Regarding the Latest and Breaking Crypto News and updates. His research interests include access control, computer forensics, Digital Marketing, Web development, business hacks, player experience, and virtual storytelling.

CBN Lifts Cryptocurrency Account Ban: A Regulatory Shift

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