Stakeholders in the crypto ecosystem have said regulation of cryptocurrencies will create new tax revenues for the government.
They spoke after the Central Bank of Nigeria lifted the ban on crypto transactions on in a circular released on Friday. The banking regulator had earlier, directed all banks to desist from transacting with entities dealing in cryptocurrency in 2021.
In a circular dated December 22, 2023, with reference number FPR/DIR/PUB/CIR/002/003, and signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa, the apex bank ordered banks to disregard its earlier stance, which had been restrictive on crypto.
The circular titled, ‘Circular to all banks and other Financial Institutions guidelines on operations of bank accounts for Virtual Assets Service Providers,’ explained the CBN’s changing stance on the digital currency following current global trends.
It said, “The CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures.”
It added, “In addition, the Securities and Exchange Commission in May 2022 issued rules on issuance, offering and custody of digital assets and VASPs to provide a regulatory framework for their operations in Nigeria.
“In view of the foregoing, the CBN hereby issues this guideline to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria.”
In its new guideline, the apex bank noted that its new guideline superseded its old ones referenced FPR/DIR/GEN/CIR/06/010 of January 12, 2017, and BSD/DIR/PUB/LAB/014/001 of February 5, 2021 on the subject.
It also stated that banks and other financial institutions were still prohibited from holding, trading and/or transacting in virtual currencies on their own account.
This new move, according to the Founder and Coordinator, Blockchain Nigeria User Group, Chimezie Chuta, is a good one.
He told The PUNCH that, “Even though this is late, we think it is a step in the right direction as an industry. It is also good for the economy because now that there would be regulation, it means that government will be able to tax it and regulators and policy makers will be able to take pride in the fact that they have taken a step in the right direction.”
He however noted that the new guidelines have conditions for the Securities Exchange Commission to adhere to for things to operate properly.
The Lead Partner and Head of Blockchain and Virtual Assets Practice at Infusion Lawyers, Senator Ihenyen, said that by regulating virtual assets rather than resisting them, the CBN and other regulators were in a much better position to ensure the soundness and safety of the financial system.
He said, “Thankfully, our regulators will now work together to ensure consumer protection and investor safety. Nigeria can no longer afford to keep pushing digital assets underground, for obvious economic and security reasons, especially when you are number on in crypto adoption in Africa and a leading market in the globe.”
He added, “The CBN has adopted a regulatory approach that focuses on the financial institutions that are under its direct regulatory purview, not necessarily VASPs. Effectively, financial institutions will now be responsible for ensuring that its customers who are VASPs are complying with the relevant standards.”
For the Chief Executive Officer of the Centre for the Promotion of Private Enterprises, Muda Yusuf, the CBN must ensure adequate regulatory framework to reduce money laundering issues.
