In an advanced communication, the Central Bank of Nigeria lifted the ban on banks and financial institutions involved in crypto transactions. The decision to loosen the restrictive measures on crypto transactions in Nigeria emanated from the rise of the crypto-savvy population in the African region.
Nigeria Loosen Ban of Crypto Transactions
In a December 22 publication, the Nigerian Apex bank admitted that the demand for crypto assets has impacted the violation of existing regulations on digital assets. In 2021, the Bank of Nigeria imposed restrictive measures on banks and financial institutions engaging in crypto transactions.
The prohibitive approach aimed at addressing the use of crypto assets in money laundering and financial terrorism. However, the surge in crypto activities has forced the regulators to reverse its decision on an outright crypto ban.
After analyzing the emerging global trends, the Nigerian regulators noted that it was essential to supervise the crypto-related activities, including the operations of the virtual assets service providers (VASPs), token issuers, and exchanges.
The gap in regulating crypto activities forced the Nigerian government to formulate new procedures and guidelines for handling the digital sector. According to the announcement, the regulators seek to enforce new risk management approach for banks facilitating crypto transactions on behalf of the regulated VASPs.
High Adoption of Crypto in Nigeria
Besides the new guidelines, the regulators bar financial institutions from allowing traders to use their bank accounts in crypto activities. The regulators underlined that bank accounts will only be used in crypto activities if they meet the requirements for the new guidelines.
Under the new provision, the financial institutions are guided on creation bank accounts for crypto purposes and opening designated settlement account. The new provision mandates the financial institutions to support forex inflows and the buying and selling crypto assets.
In an earlier report, the Securities and Exchange Commission (SEC) revised the existing rules for digital assets to loosen the ban on crypto assets.
Industry Leaders Calls for Friendly Crypto Regulation in Nigeria
The SEC recognized that with the high adoption of crypto assets in Nigeria, developing friendly regulations for digital assets was essential.
Besides the SEC proposal for friendly regulation, industry leaders advised the federal government to embrace regulations promoting the adoption of blockchain technology.
A statement from the president of the Stakeholders in Blockchain Association of Nigeria (SIBAN), Obinna Iwuno, urged the regulators to develop a regulatory framework that increases the usability of blockchain technology in various industries.
The executive noted that with changes in the financial landscape, Nigeria was prepared to adopt blockchain technology. Iwuno admitted that adopting friendly blockchain policies positions Nigeria as a pioneer in matters concerning crypto and blockchain technologies in Africa.
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