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In a significant reversal of its stance on digital tokens, the Central Bank of Nigeria (CBN) has rolled back its ban on dealings with companies involved in cryptocurrencies, as reported by BusinessDay. This pivotal decision, arriving in the wake of new regulations from the Securities and Exchange Commission (SEC), marks a notable shift in the regulatory landscape for crypto companies in the country.
Initially imposed in February 2021, the CBN's ban had restricted deposit-taking financial institutions from engaging with cryptocurrency exchanges. However, the recent turn of events is set to breathe new life into Nigeria's crypto exchanges, positioned as the second-highest adopter on Chainalysis Inc.'s blockchain adoption index. Despite the volatility in virtual asset prices, Nigeria has witnessed a resilient 9 percent increase in cryptocurrency transactions, according to Chainalysis data from September.
Under the revised regulations, Nigerian banks are now empowered to open accounts for Virtual Asset Service Providers (VASPs), commonly referred to as crypto companies. These financial institutions can offer designated settlement accounts, facilitating foreign exchange flows and trade. Notably, crypto companies must obtain a license from the SEC, adhering to specific requirements, including a minimum paid-up capital of ₦500 million ($553,000) and registration with the Corporate Affairs Commission (CAC).
To further ensure compliance, banks are mandated to obtain the Bank Verification Number (BVN) of all directors and owners associated with the crypto companies they serve. The guidelines also incorporate robust Know Your Customer (KYC) measures that VASPs must follow before establishing a banking relationship.
This shift in crypto policy aligns with the backdrop of Nigeria's currency experiencing significant devaluation in the current year. Residents, seeking an alternative store of value, have turned to cryptocurrencies. With banking channels reopening, Nigeria's crypto industry is poised for substantial growth.
The Central Bank of Nigeria's decision to lift the ban on crypto dealings signifies a pivotal moment for the nation's digital asset landscape. As regulatory hurdles are addressed and opportunities for growth unfold, the future looks promising for Nigeria's crypto industry. This development not only responds to the changing financial needs of the populace but also sets the stage for a more inclusive and robust crypto ecosystem in the region.
