Nigeria Lifts Long-standing Restrictions on Cryptocurrency Transactions

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Last Updated on December 24, 2023 by Bitfinsider

The Central Bank of Nigeria (CBN) has reversed the country’s prohibition on cryptocurrency transactions, reversing its prior stance. On December 22, the adjustment was notified in a circular. It enables Nigerian banks and other financial institutions to re-establish contact with bitcoin service providers.

The original prohibition, enforced in February 2021, was largely adopted because to worries about the hazards of money laundering and terrorism funding linked with crypto assets. Financial institutions are now permitted to create accounts for enterprises dealing in virtual/digital assets under the new criteria, but these accounts must be properly designated for that purpose.

When dealing with accounts for crypto-related enterprises, banks and other financial institutions must follow the rules established in the CBN’s instructions. Meanwhile, the Nigerian Securities and Exchange Commission requires Virtual Asset Service Providers (VASPs) operating in the crypto market to be licensed. While banks and financial institutions can facilitate transactions for VASPs, they are still prohibited from trading, holding, or dealing in cryptocurrencies on their own accounts.

Given the country’s youthful, tech-savvy population, which has showed a considerable interest in cryptocurrencies, the removal of the prohibition is likely to have a substantial influence on the Nigerian financial scene. According to Chainalysis, the amount of cryptocurrency transactions in Nigeria increased by 9% year on year to $56.7 billion between July 2022 and June 2023.

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