Nigeria’s central bank reverses crypto trading ban

Nigeria's Central Bank has reversed its February 2021 directive that prohibited financial institutions from engaging with cryptocurrencies. The bank's latest circular underlined the global shift towards regulating virtual asset service providers (VASPs), including cryptocurrencies, due to emerging trends.

While the Central Bank of Nigeria (CBN) acknowledges the need for regulation, it continues to maintain certain restrictions. The new guidelines mandate banks and financial institutions to adhere to specific protocols when facilitating transactions related to crypto assets, including setting up designated accounts and channels for foreign exchange inflows linked to crypto trades.

Furthermore, VASPs are now required to obtain licensing from Nigeria's Securities and Exchange Commission (SEC) to operate within the crypto sphere. Despite these adjustments, the CBN reiterated that banks are still prohibited from directly trading, holding, or transacting in cryptocurrencies.

Nigeria, with its youthful and tech-savvy demographic, has witnessed a surge in cryptocurrency adoption. According to a recent report by New York-based blockchain research firm Chainalysis, crypto transactions in Nigeria saw a 9 per cent year-over-year increase, amounting to $56.7 billion between July 2022 and June 2023.

(With Reuters inputs)