In a circular addressed to banks and other financial institutions, the Central Bank of Nigeria (CBN) has announced the lifting of the ban on crypto transactions. The decision is attributed to the recognition of the evolving global landscape, highlighting the necessity to regulate the operations of crypto companies.
The circular emphasizes that the Money Laundering Act of 2022, specifically Section 30, now acknowledges crypto companies, referred to as virtual asset service providers (VASPs), as financial entities. Additionally, the CBN cites the guidelines for crypto companies operating in Nigeria, as outlined by the Nigerian Securities Exchange Commission (SEC) in 2022, as a contributing factor necessitating the reversal of the previous restrictions.
Banks are now permitted to facilitate crypto transactions; however, they remain restricted from engaging in trading, holding, or conducting transactions involving cryptocurrencies.
What Nigerian banks are permitted to undertake with crypto companies?
According to the CBN circular released yesterday, it is stated clearly how Nigerian banks can now facilitate crypto-related transactions and they are stated below:
Banks are now authorized to open bank accounts for crypto companies, also known as Virtual Asset Service Providers (VASPs), and provide them with designated settlement accounts. Banks can serve as channels for foreign exchange (FX) flows and trade in collaboration with these crypto companies.
However, crypto companies seeking to utilize banking services must obtain a license issued by the Securities and Exchange Commission (SEC) to operate. As per SEC regulations, VASPs, such as crypto exchanges, are required to maintain a minimum paid-up capital of ₦500 million ($553,000) and must be duly registered with the Corporate Affairs Commission (CAC).
Crypto companies intending to issue tokens must submit a white paper to the SEC and await a 30-day review period to determine if the tokens can be launched in Nigeria.
Furthermore, banks are mandated to collect the Bank Verification Numbers (BVN) of all directors and owners of the crypto companies using their services. The guidelines also stipulate stringent Know Your Customer (KYC) measures that must be adhered to before a VASP can establish an account with a bank.
