The Central Bank of Nigeria (CBN) has taken a significant step towards embracing digital assets by releasing guidelines for banks on how to handle cryptocurrencies. This move indicates a shift in the country’s regulatory stance on crypto, which had previously been stringent.
The guidelines, which were made public on the CBN’s website, provide detailed information on the regulators’ decision to allow virtual asset service providers to open accounts with banks. This decision marks a reversal of the years-long ban that prevented financial institutions in Africa’s largest economy from servicing crypto firms.
In a statement, the CBN acknowledged the global trend of regulating virtual asset service providers, including cryptocurrencies and crypto assets. The guidelines, however, do not lift restrictions on Nigerian banks holding or trading cryptocurrencies on their own behalf. Additionally, the rules prohibit cash withdrawals from crypto accounts and the clearing of third-party checks through virtual asset-holding accounts.
Nigeria’s move to increase oversight of digital assets aligns with similar initiatives in neighboring African nations. Cryptocurrencies have gained popularity in these countries as a hedge against inflation. For instance, Botswana passed a law in 2022 to regulate the digital assets sector, despite facing opposition from some lawmakers. Similarly, the Bank of Mauritius has been planning to launch a central bank digital currency, according to Bloomberg News.
The CBN’s decision to provide guidelines for banks on digital assets reflects a growing recognition of the potential benefits and importance of cryptocurrencies. By allowing virtual asset service providers to open accounts, Nigeria is positioning itself to tap into the opportunities presented by the digital asset industry. This move also demonstrates a willingness to adapt to global trends and embrace technological advancements.
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