The Nigerian central bank has reversed its Feb. 5 order which barred banks and financial institutions from extending their services to crypto entities. The central bank said new guidelines align with the Financial Action Task Force’s updated recommendation 15, which calls for the regulation of virtual asset service providers.
Guidelines Align With FATF’s Recommendation
On Dec. 22, the Central Bank of Nigeria (CBN) announced that it had rescinded an order that prohibited banks from servicing the crypto industry. In its newly issued guidelines on the operation of bank accounts for virtual asset service providers (VASPs), the central bank stated that the order also supersedes the Jan. 12, 2017 prohibition.
As previously reported by Bitcoin.com News, the CBN’s Feb. 5, 2021 prohibition order specifically requested that Nigerian financial institutions exclude crypto entities from the banking ecosystem. Under then-governor Godwin Emefiele, the central bank actively enforced the order and this resulted in many bank accounts linked to crypto being closed.
However, in the circular which explains the rationale for abandoning the prohibition order, the CBN said the decision aligns Nigeria’s regulations with global trends. The circular also cites the Financial Action Task Force (FATF)’s updated recommendation 15 as one of the reasons for the central bank’s changed stance.
“Current global trends have shown that there is a need to regulate the activities of virtual asset service providers (VASPs) which include cryptocurrencies and crypto assets. Following this development, the Financial Action Task Force in 2018 updated its recommendation 15 to require VASPs to be regulated to prevent the misuse of virtual assets for ML/TF/PF,” the CBN stated.
The central bank added that a section of the country’s money laundering laws now recognizes VASPs as part of the definition of a financial institution, while the rules issued by the Securities and Exchange Commission provide a regulatory framework for their operations.
Nonetheless, in its circular sent to banks and other financial institutions, the CBN said these entities are still barred from either holding, trading, or transacting in virtual currency on their own account. The central bank added it expects immediate compliance with the new guidelines.
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