Nigeria’s Central Bank has removed a two-year restriction on cryptocurrency transactions as it introduces stringent customer KYC and anti-money laundering checks. The CBN banned banks from crypto-related transactions in 2021, citing money laundering and terrorism financing concerns. The regulator has now reversed that ban and taken a positive posture towards digital currency assets, issuing new guidelines to financial institutions for crypto transactions.
“Things are going to be more transparent. People are going to gravitate towards licensed platforms, and very importantly, we would have fewer cases of customers losing money,” said Buchi Okoro, CEO and co-founder of Quidax, a Nigerian crypto platform that offers exchange and over-the-counter trading services.
Based on the new guidelines released on Friday, banks must obtain the bank verification number (BVN) of all directors and owners of crypto businesses that use their services. The rules also mandate cryptocurrency companies to secure a license from the country’s capital markets regulator, the Securities Exchange Commission (SEC). Earlier in May 2022, the Security Exchange Commission issued rules on offering and collecting digital assets.
Per the SEC rules, virtual assets service providers (VASPs) such as crypto exchanges must have at least ₦500 million ($553,000) in capital and be registered with the CAC.
“The guidelines are not perfect, but there are some things that have to be in place to bring much-needed confidence to the industry,” Okoro said. Crypto companies wanting to issue tokens must submit a white paper to the SEC and wait for 30 days to find out if they can release those tokens in Nigeria.
According to CBN’s latest guidelines, banks are still prohibited from holding, trading, and transacting in virtual currencies on their account. Experts say that due to the volatility of crypto funds, implementing checks across the board makes perfect sense to safeguard customer funds. The apex bank said its new guidelines align with global standards to regulate the use of crypto in the country.
