25 December 2023
Central Bank of Nigeria lifts ban on cryptocurrency transactions, prompting calls for regulations in the blockchain sector
The blockchain sector in Nigeria is urging the federal government to establish regulations for virtual asset service providers (VASPs) in the country. This call comes after the Central Bank of Nigeria (CBN) recently removed constraints on Nigerian banks assisting cryptocurrency transactions. The CBN acknowledged the global demand for cryptocurrencies and the need for regulations and strong risk management procedures.
1. CBN lifts ban on Nigerian banks aiding cryptocurrency transactions
– The CBN has lifted the ban on Nigerian banks working with digital currencies, which had been enforced for almost two years.
– The strict regulations imposed on financial institutions were deemed unsustainable due to the increasing worldwide demand and usage of cryptocurrencies.
2. Regulations aim to establish guidelines for VASPs
– The purpose of the new regulations is to establish ground rules for VASPs in Nigeria.
– The regulations will ensure that the operations of VASPs adhere to strong risk management procedures in the banking sector.
3. Prohibitions on banks and financial organizations
– Banks and other financial organizations are still prohibited from using their own accounts for holding, trading, or dealing in cryptocurrencies.
– This restriction aims to maintain control and oversight over cryptocurrency transactions.
4. Call for government regulations in the blockchain sector
– The blockchain sector in Nigeria has formally requested the government to establish rules that promote the widespread use of blockchain technology.
– A legislative framework is urgently needed to facilitate the integration of blockchain technology into various economic sectors.
The Central Bank of Nigeria’s decision to remove constraints on Nigerian banks involved in cryptocurrency transactions acknowledges the need for regulations in response to the global demand for cryptocurrencies. The new regulations aim to establish guidelines for VASPs and ensure strong risk management procedures in the banking sector. Additionally, the blockchain sector in Nigeria has called on the government to establish rules to encourage the broader use of blockchain technology. It is clear that a legislative framework is urgently required to facilitate the integration of blockchain technology into various economic sectors in Nigeria.