Nigeria Reverses Ban on Bank Accounts for Crypto Firms, Paving the Way for Increased Usage

The Central Bank of Nigeria has made a significant decision that could have a profound impact on the use of cryptocurrencies in the country. In a reversal of its previous prohibition, the bank has now allowed local banks and financial institutions to serve crypto firms. This move is expected to spur the adoption of digital assets in Nigeria, which has been one of the world’s fastest adopters of cryptocurrencies.

The decision to lift the ban on institutions facilitating cryptocurrency transactions comes after a 2021 directive that initially prohibited such activities. However, the central bank clarified at the time that it was not banning crypto trading in the country. Despite the restrictions, adoption of cryptocurrencies continued, with users resorting to peer-to-peer trading.

The lifting of restrictions on crypto exchanges and other service providers from opening bank accounts is seen as a positive development that could boost adoption even further. Yellow Card, a prominent pan-African exchange, has already expressed its intention to seek a crypto license in Nigeria under the regulatory frameworks introduced in May this year. The company’s chief data protection officer, Lasbery Oludimu, believes that the new policy will create a regulated environment that fosters trust and confidence among users, attracting more individuals and businesses into the crypto space.

The Central Bank of Nigeria’s decision is said to be influenced by the global trend of regulating cryptocurrencies rather than imposing blanket bans. International standard setters like the Financial Stability Board (FSB) and the International Monetary Fund (IMF) have recommended the supervision of the industry. The bank’s circular, which is yet to be published on its website, references the need to align with these international standards.

The announcement of the lifting of the ban has been met with enthusiasm by the Nigerian crypto community. One crypto personality on X described the circular as a “Christmas present.” This decision is expected to have a significant impact on the crypto industry in Nigeria, as it provides clarity and a regulatory framework that instills trust and confidence among users.

Overall, the Central Bank of Nigeria’s reversal of its prohibition on local banks and financial institutions serving crypto firms is a significant development that is likely to lead to a surge in the usage of cryptocurrencies in the country. With the lifting of restrictions and the introduction of a regulated environment, Nigeria is poised to further solidify its position as one of the world’s fastest adopters of digital assets.