After reversing the blanket ban on cryptocurrencies, the Central Bank of Nigeria (CBN) has unveiled a comprehensive framework detailing regulations for financial service providers engaged in crypto operations.
The decision marks a shift from stringent prohibition to a regulated environment, aligning with global trends centred around blockchain technology and digital assets.
Under the new guidelines, the CBN has imposed strict rules targeting crypto exchanges and digital asset brokers. These entities are now permitted to operate naira-denominated bank accounts exclusively.
Notably, cash withdrawals from these accounts are prohibited, and the use of such accounts for clearing third-party checks has been expressly prohibited. Additionally, withdrawals are capped at two per quarter for these operators.
December witnessed Nigeria lifting the ban on crypto transactions, allowing banks to extend their services to virtual asset operators.
The policy shift created avenues for crypto firms to obtain business licenses and fostered an environment conducive to blockchain innovation.
Moreover, a collaborative effort between local financial entities and blockchain firms is underway to introduce Nigeria’s inaugural regulated stablecoin, cNGN.
This digital currency initiative, alongside eNaira, the central bank digital currency issued by the CBN, signifies a notable stride toward digital financial evolution in the country.
However, the CBN remains resolute in its stance against banks engaging in the possession or trade of cryptocurrencies, citing persistent concerns regarding fraud and financial risks associated with these assets.
Nigeria’s recognition of Bitcoin and cryptocurrencies echoes a broader trend across the continent as blockchain adoption gathers momentum.
Notably, Nigeria secured the second position on the Global Crypto Adoption Index Top 20, as per Chainalysis, solidifying its status as a critical player in the crypto landscape within Africa.
The CBN’s stringent regulations, while allowing for the operation of crypto-related businesses within defined boundaries, underscore the cautious approach taken to mitigate risks while embracing the potential of blockchain technology and digital assets in Nigeria’s financial landscape.
