The Central Bank of Nigeria (CBN) has officially lifted its ban on cryptocurrency trading, giving banks the green light to facilitate crypto transactions for customers within the country. This decision comes after almost three years of commercial banks being prohibited from servicing Nigeria-based crypto clients.
The new regulation, signed by CBN Director Haruna Mustafa, was announced in a circular titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’ According to a local report citing the circular, the motive behind this directive is to regulate the crypto trading platforms that offer digital assets. In May 2022, the country’s Securities and Exchange Commission (SEC) introduced new crypto laws to promote adoption and safeguard users.
When the SEC regulations were first announced, it was unclear how they would be implemented in Nigeria due to the CBN’s restrictions on commercial banks and other financial institutions facilitating crypto transactions. The ban, which was implemented in early February 2021, resulted in the immediate closure of bank accounts involved in processing crypto trades. These restrictions were imposed due to concerns over money laundering and terrorism financing.
During this period, Nigerian crypto traders turned to platforms that offered peer-to-peer (P2P) services, such as Binance, Paxful, and Remitano. Through these services, they were able to bypass the CBN ban and carry out crypto trades.
While the latest circular from the apex bank allows investors to directly trade cryptocurrencies with banks, financial institutions are reminded that they are not permitted to hold or trade cryptocurrencies in their accounts.
Nigeria has established itself as the African country with the highest number of cryptocurrency holders. It also ranks among the top nations with a significant number of crypto users. Despite the increased engagement with cryptocurrencies like Bitcoin among its citizens, the Nigerian government has yet to fully embrace Bitcoin as a legal tender. However, the Central African Republic (CAR) has followed the lead of El Salvador and become the first African country and the second country globally to adopt BTC as a legal tender.
