✔️ Information reviewed and updated in May 2024 by Eduardo López
Central Bank of Nigeria Repeals Previous Bans to Encourage Financial Trading in Digital Assets
In a significant change, the Central Bank of Nigeria (BCN) has repealed restrictions that prohibited banks and other financial institutions from dealing with bitcoin (BTC) and cryptocurrency service providers, such as exchanges.
The Nigerian monetary entity, through a circular issued last week, announced that, considering the regulatory developments around the Bitcoin ecosystem at the national and international level, local banks are now allowed to carry out transactions with exchanges, always under strict conditions. regulatory regime.
The BCN has established detailed guidelines that, for the moment, focus exclusively on cryptocurrency transactions. Banks and other institutions are still prohibited from holding, trading and transacting these assets for their own account.
According to the bank, these guidelines seek to establish minimum standards for relationships between Nigerian financial institutions and companies in the bitcoin sector. Furthermore, they aim to provide effective monitoring of the activities of banks and other financial institutions when providing services to cryptocurrency exchanges.
Guidelines for Trading with Exchanges
One of the main guidelines of the NCB states that Nigerian financial institutions can only engage with bitcoin and cryptocurrency service providers that are licensed by the Nigerian Securities and Exchange Commission (SEC).
Likewise, the BCN determines that financial entities can open designated accounts for cryptocurrency service providers and operate as channels for currency flows and trade, as long as the exchanges have the approval of the commercial bank's senior management.
The guidelines place the responsibility on banks to continually monitor all activities of designated accounts opened to exchanges and other bitcoin and cryptocurrency service providers. In addition, they must submit monthly reports with details on the total value and volume of transactions, cases of fraud or theft, and the number of customer complaints, along with corrective measures taken.
The BCN has established operational and transactional limits for the bank accounts of bitcoin and cryptocurrency service providers, arguing that they are prudent measures in relation to the volume of cash handled and the risks associated with their businesses.
End to Previous Restrictions and Growth Expectations
These guidelines mark the end of a regulatory regime that prevented Nigerian banks from engaging with cryptocurrency exchanges, based on concerns that these assets were being used for illicit activities, including money laundering.
Despite the previous restrictions, the Bitcoin ecosystem in Nigeria has continued to grow steadily. Currently, Nigeria ranks second globally in bitcoin and cryptocurrency adoption, according to the index compiled by blockchain analysis firm Chainalysis.
With these new guidelines, exposure to BTC and crypto assets is expected to expand more freely in Nigeria, consolidating its position as a leader in global cryptocurrency adoption.
This regulatory change in Nigeria opens new opportunities for the participation of banks and exchanges in the cryptocurrency ecosystem. Stay informed about related developments and analysis by following us on our social networks: Facebook, Twitter y LinkedIn. Discover how these developments could influence the adoption and growth of cryptocurrencies in the African country.