The news
- The Central Bank of Nigeria (CBN) has lifted the restriction on banks from facilitating crypto transactions.
- The CBN has also released guidelines for banks and other financial institutions when operating with entities that provide crypto services.
- This directive is coming two years after crypto enthusiasts and companies yearned for the apex bank to lift the restriction.
According to the circular sent to banks and other financial institutions, CBN said it lifted the ban because current global trends have shown that there’s a need to regulate the activities of crypto companies.
It said Section 30 of the Money Laundering Act of 2022 now recognises crypto companies—which it calls virtual asset service providers (VASPs) — as financial companies.
It also referred to the guidelines for crypto companies to operate in Nigeria released by the Nigerian Securities Exchange Commission (SEC) in 2022, as another reason why the restriction needed to be lifted.
While banks can now facilitate crypto transactions they are prohibited from trading, holding or transacting cryptocurrencies.
What Nigerian banks are allowed to do with crypto companies
Banks are now allowed to open bank accounts for crypto companies, also referred to as VASPs, provide them with designated settlement accounts, and act as channels for FX flows and trade.
However, crypto companies that wish to use banks must have a licence issued to them by the SEC to operate.
According to the SEC VASPs such as crypto exchanges will be required to pay a minimum paid-up capital of ₦500 million ($553,000) and must be registered duly with the CAC.
Crypto companies that also wish to issue tokens must first submit a white paper to the SEC and wait 30 days to know if such tokens can be launched in Nigeria.
Banks are also required to get the BVN of all the directors and owners of the crypto companies using its services. The guideline includes other stringent KYC measures before a VASP can have an account with a bank.
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