Nigeria's Central Bank Eases Crypto Ban For Banks

CBN revises crypto policy, allowing Nigerian banks to engage with virtual asset service providers.

How is global acceptance of cryptocurrencies progressing?

In a significant policy shift, the Central Bank of Nigeria (CBN) has revised its stance on cryptocurrencies, now permitting local banks to engage with virtual asset service providers (VASPs) and handle crypto transactions. This move marks a departure from the ban imposed in 2021, reflecting evolving attitudes towards digital currencies.

New Guidelines For Banks And Crypto Companies

The CBN's decision to allow Nigerian banks to open accounts for VASPs is conditioned on several compliance requirements. VASPs seeking to operate in the region must acquire the appropriate license, verify their company’s registered office, and submit detailed information about their directors, chief executives, and beneficiaries. This includes providing credentials, residential addresses, and Bank Verification Numbers (BVN). These regulations are part of the CBN's broader digital asset guidelines aimed at integrating virtual currencies into the country's financial system while maintaining regulatory oversight.

Permitted Banking Services And Restrictions

Under the new policy, Nigerian banks are authorized to open special accounts for VASPs, offer settlement services, and facilitate foreign exchange circulation. However, it is crucial to note that while banks can interact with cryptocurrency companies, they are still barred from holding or trading crypto assets in their own accounts. This restriction underscores the cautious approach the CBN is taking, balancing the potential benefits of digital assets with the need to maintain financial stability and compliance.

Development Of The cNGN Banking Stablecoin

In a related development, some of Nigeria’s leading banks have formed a consortium to create the cNGN banking stablecoin. Financial Market Analyst Olumide Adesina explains that this stablecoin will be pegged to the Nigerian naira and is intended to complement the eNaira, Nigeria's digital currency. The consortium includes notable financial institutions such as Access Bank, Sterling Bank, and First Bank, among others. This initiative, which has not been officially commented on by the CBN, reflects a growing interest in digital currencies in the Nigerian financial sector.

Enhancements To Nigeria's CBDC

2023 saw significant technical advancements in Nigeria’s Central Bank Digital Currency (CBDC), the eNaira, with the introduction of contactless payment options. This upgrade enables eNaira users to make digital currency transactions for various goods and services, further integrating the CBDC into everyday financial activities. This development is part of the CBN's effort to modernize the country's financial infrastructure and embrace the potential of digital currencies.

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