Following the directive restricting banks and other financial service providers from operating accounts for cryptocurrency service providers in 2021, the Central Bank of Nigeria on 22 December 2023, issued guidelines on the operation of bank accounts of firms transacting in crypto assets and cryptocurrency (also referred to as Virtual Asset Service Providers (VASPs).
Within this context, VASPs are defined as entities that conduct the following activities for and on behalf of the following persons;
a. exchange between virtual assets and flat currencies
b. exchange between one or more forms of virtual assets
c. transfer of virtual assets
d. safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets and
e. participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.
This article will examine key provisions of the guideline as well as its implication for Virtual Asset Service Providers within the finance regulatory landscape in Nigeria.
KEY PROVISIONS OF THE GUIDELINES
A. As regards operating accounts of VASPs, banks, and other financial institutions are only permitted to carry out the following activities;
i. Opening of designated accounts
ii. Provide designated settlement accounts and settlement services
iii. Act as channels for FX flows and trade
iv. Any other activity that may be permitted by the CBN from time to time.
B. A company that provides virtual /digital assets services and is seeking to open a designated account with any bank or financial institution must provide alongside other requirements, a valid license from the Securities and Exchange Commission authorizing such entity to operate as either a VASP, Digital Asset Exchange or Digital Asset Exchange Operator.
C. All accounts opened in line with this guideline shall only be used for transactions on virtual/digital assets
D. Cash withdrawals are prohibited on such accounts
E. Financial institutions are obligated to render data and information on designated accounts to the CBN, etc.
CONCLUSION
The new guidelines give a boost to pre-existing regulations on VASPs in Nigeria. We are therefore hopeful to see better regulatory measures for crypto-related transactions in the coming future. Need to make inquiries about the regulations for cryptocurrency firms in Nigeria? Feel free to book a session by reaching out to us through our Whatsapp icon on the lower right part of this page of HERE, and we’ll attend to you.
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