Nigeria Makes U-Turn by Opening Banks to Cryptocurrencies

Abuja – After previously banning banks from facilitating cryptocurrency transactions, the Central Bank of Nigeria (CBN) has now released new guidelines allowing virtual currency service providers to open accounts. These providers, referred to as Virtual Assets Service Providers (VASPs), include cryptocurrency exchanges and other crypto asset companies.

While banks still cannot directly trade or transact with virtual currencies, under the new guidelines they are permitted to open designated VASP accounts, provide settlement services for VASP transactions, facilitate foreign exchange flows related to VASP activities, and conduct any other VASP-related services permitted by the CBN.

FATF Guidelines Shape Nigeria’s Cryptocurrency Reforms

The change comes two years after the CBN’s 2021 prohibition and is prompted by global trends indicating a need to regulate virtual asset activities. All VASPs will require licensing from Nigeria’s Securities and Exchange Commission to open a designated account. Strict know-your-customer identification processes for directors and beneficial owners are also stipulated.

The CBN’s move aligns with 2019 guidance from the Financial Action Task Force (FATF), an international anti-money laundering watchdog. The FATF advises member countries to license virtual asset providers, subject them to monitoring for compliance, and mitigate money laundering/terrorism financing risks.

By permitting regulated cryptocurrency market access to banking services, Nigeria joins a global shift toward integrating virtual assets into formal financial systems. The CBN guidelines are a major reversal after the 2021 crypto trading ban. Their impact on cryptocurrency adoption and remittance flows in the Nigerian economy could be significant.