- The Central Bank of Nigeria (CBN) released a circular containing guidelines on virtual assets service providers (VASPs).
- The circular signaled a shift from the CBN’s original position, which restricted crypto transactions.
- According to the CBN, Current trends globally have shown that there is a need to regulate VASPs.
On Friday, December 22, the Central Bank of Nigeria (CBN) released a circular containing guidelines on virtual assets service providers (VASPs) to all banks and financial institutions (OFIs) in the country. The circular, signed by the apex bank’s Director of Financial Policy and Regulation Department, Haruna Mustapha, signaled a shift from the CBN’s original position, which restricted crypto transactions.
The CBN’s new guidelines allow banks and OFIs to offer services to cryptocurrency users, citing current trends across the globe. A section of the circular read:
“Current trends globally have shown that there is a need to regulate the services of virtual assets service providers (VASPs), which include cryptocurrencies and crypto assets.”
In February 2021, the CBN released a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers. The regulator cited money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations and the absence of regulation and consumer protection measures.
With the latest circular, the CBN provides guidelines for financial institutions under its regulatory purview concerning their banking relationships with VASPs in Nigeria. It also noted that the new guidelines supersede its previous circulars of 2017 and 2021 on the subject. However, the regulator warned that banks and financial institutions within the country cannot hold, trade, or transact in virtual currencies on their account.
The latest development from the Nigerian regulator has generated enthusiasm among crypto users. One of the users who posted on X said the CBN has set a new course for crypto . The user noted that it marks a pivotal shift towards innovation in finance, where traditional banking meets the crypto sphere, paving the way for secure and regulated digital asset services.
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