CBN implements stricter Know Your Customer (KYC) measures and regulatory guidelines for crypto transactions.
In a significant shift of stance, Nigeria’s Central Bank (CBN) has lifted a two-year ban on cryptocurrency transactions. This decision, announced recently, reflects a more open approach towards digital currency assets after initially citing concerns about money laundering and terrorism financing in 2021. Recognizing the evolving landscape of digital assets, the CBN has introduced stringent Know Your Customer (KYC) and anti-money laundering measures to ensure transparency and security in the crypto space.
The revised guidelines highlight the importance of transparency and accountability for all stakeholders. Banks facilitating crypto transactions are now mandated to collect the bank verification number (BVN) of all directors and owners of crypto businesses they serve. Additionally, crypto firms are required to obtain licenses from Nigeria’s capital markets regulator, the Securities Exchange Commission (SEC). Further emphasizing regulatory compliance, the SEC had previously rolled out rules in May 2022 concerning the offering and collection of digital assets. These regulations mandate that virtual assets service providers (VASPs) like crypto exchanges maintain a minimum capital of ₦500 million ($553,000) and secure registration with the Corporate Affairs Commission (CAC).
Despite the positive strides, some restrictions remain in place. Notably, banks are still prohibited from holding, trading, or transacting in virtual currencies directly. This precautionary measure by the CBN is believed to be in response to the inherent volatility associated with cryptocurrencies. Buchi Okoro, CEO and co-founder of Quidax, a prominent Nigerian crypto platform, expressed optimism about the new guidelines, emphasizing their potential to instill confidence in the industry. He noted that while the guidelines may not be flawless, they lay essential groundwork for enhancing trust and security in Nigeria’s burgeoning crypto ecosystem.
Overall, Nigeria’s regulatory shift signals a growing recognition of the transformative potential of cryptocurrencies while underscoring the need for a robust framework to protect investors and uphold financial integrity. Aligning with global standards, these measures aim to strike a balance between fostering innovation and mitigating associated risks in the crypto domain.