Transacting in cryptocurrency legal -CBN.

The Central Bank of Nigeria (CBN) has lifted the two-year-old restriction on cryptocurrency transactions in the Nigerian banking system.

The reverse of the policy was revealed in a circular by the CBN’s Director of Financial Policy and Regulation, Haruna Mustapha.

In an effort to curb its abuse, Mustapha announced that the central bank will soon provide guidelines for banks on how to handle bitcoin.

The Central Bank of Nigeria (CBN) restricted financial institutions from opening accounts for cryptocurrency service providers in a circular they released in February 2021.

The former governor of the Central Bank of Nigeria, Godwin Emefiele, had previously stated that the ban was essential due to the dangers that cryptocurrencies offered for the purposes of money laundering and the funding of terrorists.

The lack of regulation and consumer protection measures, together with the inherent vulnerability of cryptocurrency activities, according to Emefiele, were further factors that led to the decision.

Cryptocurrencies and other forms of virtual asset service provision (VASP) necessitate regulation, argues Mustapha, in light of recent developments around the world.

In light of these changes, the Financial Action Task Force (FATF) revised its call for regulation of VASPs as a means to curb the abuse of virtual assets.

Given the circumstances, the Central Bank of Nigeria (CBN) has decided to provide these instructions to help the Nigerian financial institutions that fall under its regulatory area understand how to deal with VASPs.

The director made it clear that the guidelines take precedence over the CBN circular from February 5, 2021, regarding the matter.

On the other hand, he did caution that it was still illegal for banks and other financial organisations to possess, trade, or engage in cryptocurrency transactions.