- The Central Bank of Nigeria has released a roadmap for banks to open cryptocurrency accounts. This follows the lifting of the ban on financial institutions providing services to digital asset companies.
- Regulations for coordinating the activities of virtual asset service providers (VASPs) place strict restrictions on how these accounts can be utilized.
In February 2021, the Central Bank of Nigeria (CBN) banned banks and other financial institutions from engaging in or supporting transactions involving cryptocurrency assets, and recently, the Central Bank of Nigeria imposed a ban on cryptocurrency trading services on December 23, 2023. has been released. .
A focused regulatory framework
The Central Bank of Nigeria (CBN) took a cautious approach to cryptocurrencies in 2017, initially banning banks from facilitating trading in digital assets. However, on December 22, the CBN changed its stance and allowed banks to open accounts on cryptocurrency exchanges and other exchanges. Digital asset service provider. The new rules provide a framework for these activities with the following key provisions:
Naira-based accounts only: Banks are now required to maintain separate naira-denominated accounts with digital asset service providers. The account may not be used for any other purpose and may not be linked to any personal or business account.
No cash withdrawals: Withdrawing cash from your cryptocurrency account is strictly prohibited. All transactions must be made via electronic transfer or other non-cash method.
No third party verification: Banks are not permitted to settle third-party checks through cryptocurrency accounts. This provision is intended to prevent money laundering and other illegal activities.
Withdrawal limits: Banks can only allow two withdrawals per quarter from your cryptocurrency account. This is mandated to prevent excessive withdrawals and to ensure that these accounts are primarily used for legitimate business purposes.
Impact on the Nigerian Cryptocurrency Environment
The new guidelines will have a significant impact, either positive or negative, on the Nigerian cryptocurrency market. On the other hand, it provides much-needed regulatory clarity to digital asset service providers who have been operating in a legal gray area since the CBN’s initial ban.
Cash withdrawal restrictions may make it difficult for users to access their funds when they need them, and withdrawal restrictions may prevent some users from using these accounts at all. Critics argue that the regulations could stifle innovation in Nigeria’s cryptocurrency sector by making it more difficult for startups to access banking services.