The central bank of Nigeria has lifted the cryptocurrency ban, and introduces new rules

The Central Bank of Nigeria has lifted its ban on transactions using cryptocurrency and is recognizing the worldwide trend of regulating digital assets, as reported in an article in a Reuters report.

This change is a departure from the bank's decision in February 2021 that barred the financial and banking institutions of engaging in cryptocurrency-related transactions because of concerns about money laundering and financing terrorism.

The new stance is in line with Nigeria's Securities and Exchange commission's effort to create the legal structure to regulate digital assets. In May the SEC issued regulations on virtual assets, indicating Nigeria's intention to strike a balance between a total ban on crypto and unregulated use.

The new guidelines were released on Dec. 22nd the financial institutions and banks are required to establish designated accounts and offer settlement services for companies dealing in crypto assets and cryptocurrencies. However, they are still not allowed to directly dealing, holding, or transacting with cryptocurrencies.

To be able to operate in the cryptocurrency business virtual asset service providers need to get a license from the Nigerian SEC. The circular of the CBN states that financial institutions are not allowed to open or operate accounts for businesses involved in digital or virtual assets without a valid authorization and conformity to the latest guidelines.

The policy change is in the midst of Nigeria's expanding cryptocurrency market, fueled by a savvy and young populace. Despite the challenges of regulatory compliance, Nigerians have increasingly turned towards peer-to-peer trading in order to circumvent financial sector regulations. According to a report from Chainalysis that Nigeria's crypto transactions volume grew by 9 percent over the previous year, and reached $56.7 billion between June 2022 and 2023.