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 in recognition of the global trend to regulate digital assets, as reported in an article in a Reuters report.

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

The shift in policy is aligned with Nigeria's Securities and Exchange Commission's attempts in establishing the legal system to regulate digital assets. In May of last year the SEC published regulations for virtual assets, signalling Nigeria's intention to strike a balance between a complete 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 not permitted to directly dealing, holding, or transacting business with crypto assets.

To be able to operate in the crypto industry virtual asset service providers have to be licensed by the Nigerian SEC. The circular from the CBN stipulates that financial institutions are not allowed to open or operate accounts for businesses involved in the business of digital assets or virtual ones without proper identification and compliance with the new rules.

The policy change is in the midst of Nigeria's expanding cryptocurrency market, fueled by a tech-savvy and young populace. Despite challenges to regulatory compliance, Nigerians have increasingly turned towards peer-to-peer trading in order to get around financial sector restrictions. According to a report from Chainalysis the country's crypto transaction volume increased by 9% year-over-year, averaging $56.7 billion between June 2022 and 2023.