Skip to content

Crypto Prohibition Order Revoked by Nigeria’s Central Bank in February 2021

The Recent Reversal of Crypto Restriction by the Nigerian Central Bank

In a significant turn of events, the Nigerian Central Bank has reversed its previous decision from February 5, 2021, which prohibited banks and other financial institutions from providing their services to organizations that deal with cryptocurrencies. The Central Bank has stated that it’s newly instated regulations align with the updated recommendation 15 by the Financial Action Task Force (FATF), which advocates for the regulation of virtual asset service providers.

The newly introduced regulations

As of December 22nd, the Central Bank of Nigeria (CBN) has revoked its order which prevented banks from cooperating with the cryptocurrency industry. The just-released guidelines regarding the functioning of bank accounts for Virtual Asset Service Providers (VASPs) specify that the latest orders override the January 12, 2017 restriction.

According to the Central Bank’s directive from February 5, 2021, Nigerian financial institutions were directed to exclude cryptocurrency-related entities from the banking landscape. During that time, Godwin Emefiele was the Governor of the Central Bank, and his administration promptly enforced these orders leading to numerous bank accounts linked with cryptocurrencies being shut down.

However, a circular that elaborates on the reasons for rescinding the restriction order indicates that the CBN’s decision is consistent with the modern approach globally. The circular refers to FATF’s updated recommendation 15 as one of the influencing factors behind the Central Bank’s policy shift.

The CBN asserted, “Present worldwide tendencies indicate that there is an urgent requirement to regulate the operations of Virtual Asset Service Providers (VASPs), which include cryptocurrencies and crypto-assets. In response to these developments, the Financial Action Task Force updated its recommendation 15 in 2018 to ensure VASPs get regulated to avoid virtual assets from being misused.”

The Central Bank went on to say that a part of the country’s money laundering legislation now includes VASPs under the definition of a financial institution. Moreover, rules established by the Securities and Exchange Commission offer a regulatory framework for their operations.

Notwithstanding, the CBN, via a circular sent to banks and other financial institutions, stated that these entities are still prohibited from either possessing, trading, or transacting in virtual currencies on their own account. Moreover, the Central Bank anticipates immediate compliance with these new guidelines.

The Quamas App Solution

In this dynamic landscape of cryptocurrency regulation, our quamas app could prove to be a valuable tool. The Quamas app provides a consolidated platform for cryptocurrency-related transactions while ensuring regulatory compliance, making the process hassle-free both for the users and the financial institutions. Thus, the recent changes by the Nigerian Central Bank could be easily adapted and incorporated by our users.

Frequently asked Questions

1. What is the Crypto Prohibition Order?

The Crypto Prohibition Order refers to the directive issued by Nigeria’s Central Bank in 2017, which banned financial institutions from providing services to cryptocurrency exchanges and individuals involved in virtual currency transactions.

2. Why did Nigeria’s Central Bank revoke the Crypto Prohibition Order?

In February 2021, Nigeria’s Central Bank announced the revocation of the Crypto Prohibition Order due to the increasing adoption and popularity of cryptocurrencies in the country. The bank acknowledged the need to regulate and provide a framework for cryptocurrency transactions rather than outrightly banning them.

3. How does the revocation of the Crypto Prohibition Order impact cryptocurrency users in Nigeria?

The revocation of the Crypto Prohibition Order is a positive development for cryptocurrency users in Nigeria. It allows them to freely engage in cryptocurrency transactions, use exchanges, and access financial services previously denied to them. It also opens up opportunities for innovation and investments in the crypto space.

4. What are the reasons behind Nigeria’s Central Bank’s change of stance on cryptocurrencies?

The change of stance by Nigeria’s Central Bank towards cryptocurrencies can be attributed to several reasons. Firstly, the growing popularity of cryptocurrencies in the country has made it difficult to ignore their potential economic benefits. Additionally, the government has recognized the need to diversify its economy and harness the opportunities presented by blockchain technology.

5. Will there be any regulations in place for cryptocurrencies following the revocation of the Crypto Prohibition Order?

Yes, following the revocation of the Crypto Prohibition Order, Nigeria’s Central Bank has indicated the intention to introduce regulations for cryptocurrencies. These regulations will aim to provide a framework for the operation of cryptocurrency exchanges, enhance consumer protection, prevent money laundering, and promote transparency in the crypto market.

6. How will the revocation of the Crypto Prohibition Order impact the crypto industry in Nigeria?

The revocation of the Crypto Prohibition Order is expected to have a positive impact on the crypto industry in Nigeria. It will attract more investments, encourage innovation in blockchain technology, and foster the growth of cryptocurrency-related businesses. The move is likely to position Nigeria as a leading hub for cryptocurrency adoption and development in Africa.

7. What does the revocation of the Crypto Prohibition Order mean for the future of cryptocurrencies in Nigeria?

The revocation of the Crypto Prohibition Order marks a significant step towards the mainstream acceptance of cryptocurrencies in Nigeria. It indicates a shift in the government’s attitude towards digital currencies and demonstrates a willingness to embrace the potential benefits they offer. The future of cryptocurrencies in Nigeria looks promising, with increased adoption, regulation, and integration into the country’s financial ecosystem.