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🇳🇬 CENTRAL BANK OF NIGERIA'S NEW CRYPTOCURRENCY GUIDELINES: KEY HIGHLIGHTS

The Central Bank of Nigeria, drawing on its powers in the Central Bank Act as well as the Banks and Other Financial Institutions Act, issued guidelines on cryptocurrency integration within the Nigerian financial. Dated December 22, 2023, this circular supersedes prior directives, signifying the arrival of the long awaited dawn crypto entities in the country.

📜 HIGHLIGHTS

RATIONALE FOR CHANGE

The circular, signed by Haruna B. Mustapha, outlines the historical concerns surrounding cryptocurrencies, emphasizing the risks associated with money laundering and terrorist financing. A global shift towards regulating cryptocurrencies motivated the Central Bank's reconsideration.

AUTHORIZED TRANSACTIONS

Commercial and Merchant Banks now have the green light to establish bank accounts for Virtual Assets Service Providers, engaging in activities such as fiat-to-digital asset exchanges, digital asset trading, and custody services.

INTRODUCTION OF GUIDELINES

The Circular introduces the "Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers," defining "Digital Asset" and "Virtual Assets" to provide clarity on the regulatory landscape.

PERMISSIBLE ACTIVITIES

Financial Institutions are permitted to engage in various activities, including opening designated bank accounts, providing settlement services, serving as channels for FX flows, and other activities subject to periodic approval by the CBN.

Note that while Virtual Assets Service Providers can now operate within the banking system, financial institutions are still prohibited from transacting in cryptocurrencies directly.

APPROVAL PROCESS

Opening a bank account for a virtual assets service provider requires approval from a senior management staff, starting from the Assistant General Manager level and above.

DOCUMENTATION REQUIREMENTS

Documents required includes a valid operating license from the Securities and Exchange Commission, Corporate Affairs Commission forms, verifiable business addresses, and compliance with the "Rules on Issuance, Offering Platforms, and Custody of Digital Assets 2022."

RESTRICTIONS

The account's usage is restricted exclusively to transactions involving Digital and Virtual Assets, with prohibitions on cash withdrawals, third-party cheque clearances, and specific guidelines for settlements.

REGULATORY AUTHORITY ACKNOWLEDGMENT

This strategic shift recognizes the Securities and Exchange Commission (SEC) as the rightful authority to regulate the cryptocurrency space, while the Central Bank maintains regulatory oversight for related transactions within the financial sector.

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On June 9th, 2023, the Nigeria Securities and Exchange Commission (SEC) issued a circular declaring the activities of Binance Nigeria Limited as illegal. The SEC claimed that the company was not registered with it and is therefore not regulated by the Commission. It warned that users within the country who are interacting with the company's cryptocurrency platform and website do so at their risk.

However, in a twist of development, it has been revealed that the company Binance Nigeria Limited as addressed in the circular by the SEC is not affiliated with the Binance International platform and has become, in fact, inactive for years in the records of the Corporate Affairs Commission.

In this video, we will discuss the SEC's circular and the implications of this development for Nigerian cryptocurrency users. We will also explore the relationship between Binance Nigeria Limited and Binance International.

Watch the video to learn more.

SEC Nigeria V Binance Nigeria Limited: Illegal Operations and Affiliation Controversy. On June 9th, 2023, the Nigeria Securities and Exchange Commission (SEC) issued a circular declaring the activities of Binance Nigeria Limited as illegal. The...