In February 2021, the apex bank had instructed all financial institutions, including banks, to close the accounts of individuals or entities engaged in cryptocurrency transactions.

The CBN had expressed concerns about the potential use of digital currencies like Bitcoin and Litecoin in terrorism financing and money laundering, citing the anonymity of virtual transactions.

However, in a circular dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003 and signed by the Director of Financial Policy and Regulation, Haruna Mustafa, the CBN has now instructed banks to disregard its previous ban on crypto transactions in the country.

The press statement read: “The CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers given the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures.

“However, current trends globally have shown that there is a need to regulate the include providers (V/ASPs) which activities of virtual assets service cryptocurrencies and crypto assets. Following this development, the Financial Action Task Force (FATF) in 2018 also updated its Recommendation 15 to require VASPs to be regulated to prevent misuse of virtual assets for ML/TF/PF Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognizes VASPs as part of the definition of a financial institution.

“In addition, the Securities and Exchange Commission in May 2022 issued Rules on Issuance, Offering, and Custody of Digital Assets and VASPs to provide a regulatory framework for their operations in Nigeria.

“Given the foregoing, the CBN hereby issues this guideline to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria.”