The Central Bank of Nigeria (CBN) has reversed its stance on restricting Nigerian banks from participating in cryptocurrency transactions, a move made almost two years after implementing a comprehensive ban on digital currency activities.
In a notice distributed to banks on December 22, the CBN recognized the growing global demand and acceptance of cryptocurrencies, leading it to reconsider the stringent limitations imposed on financial institutions in 2021.
The official communication highlighted the changing landscape, stating, "However, current global trends demonstrate the need to regulate the activities of virtual asset service providers (VASPs), including cryptocurrencies and crypto-assets." The outlined guidelines aim to establish essential standards and prerequisites for VASPs in Nigeria to establish banking relationships and initiate account openings. Furthermore, the guidelines seek to enforce robust risk management practices within the banking sector regarding licensed VASPs' operations.
Nevertheless, the notice emphasized that financial institutions are still prohibited from owning, trading, or using their accounts for cryptocurrency transactions.
Back in February 2021, the CBN issued a directive that barred all regulated financial entities from offering services to cryptocurrency exchanges within the country. However, recent developments indicate that the local blockchain industry is urging the Nigerian federal government to introduce regulations facilitating widespread integration of approved blockchain policies nationwide.
Obinna Iwuno, President of the Blockchain Stakeholders Society of Nigeria (SiBAN), highlighted the urgent need for a regulatory framework to accelerate the incorporation of blockchain technology across various sectors of the Nigerian economy.
Iwuno conveyed to Cointelegraph the country's readiness to adopt blockchain technology, stating, "We are now prepared for full adoption, and the government's initiated blockchain policy, if fully executed, will position Nigeria as a pioneering force in the continent's digital economic landscape."
