Nigeria’s Central Bank (CBN) has taken a step back from its previous hardline stance on cryptocurrency operations.
The Financial Policy and Regulation Department, led by Director Haruna B. Mustafa, issued new guidelines in a circular acknowledging the legitimacy of Virtual Assets Service Providers (VASPs), commonly known as crypto companies.
The circular clarified, “The Money Laundering (Prevention and Prohibition) Act of 2022 recognizes VASPs as part of the definition of a financial institution.” This recognition follows the Securities and Exchange Commission’s (SEC) implementation of rules in May 2022, establishing a regulatory framework for digital assets and VASPs in Nigeria.
This regulatory shift renders the CBN’s 2021 circular obsolete, as VASPs are now legally integrated into the country’s financial framework. Significantly, the CBN relinquishes authority over cryptocurrency legality, placing it firmly under the jurisdiction of the SEC.
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However, the guidelines emphasize that banks and financial institutions are still prohibited from directly trading or transacting in virtual currencies. Mustafa asserted, “Banks are hereby required to immediately comply with the provisions of the Guidelines.” Notably, this restriction aims to prevent traditional banks from engaging in speculative cryptocurrency trading with customer deposits.