Nigeria’s Central Bank Unveils Guidelines for Cryptocurrency Accounts Amid Global Regulatory Shifts

Nigeria’s central bank has introduced comprehensive guidelines for cryptocurrency accounts following the lifting of the ban imposed on cryptocurrency transactions.

The guidelines released on the central bank’s website on Tuesday provide detailed insights into the regulator’s recent decision to lift the ban on banks operating accounts for crypto service providers.

This move aligns Nigeria with other African regulators who have extended their oversight to encompass cryptocurrencies, prompted by corporate collapses and, notably, the bankruptcy of Bahamas-based exchange FTX in April.

The guidelines underscore the surge in virtual currency adoption within Nigeria, driven in part by the significant depreciation of the nation’s fiat currency.

The central bank’s stance balances the need to accommodate the growing interest in cryptocurrencies while maintaining regulatory control to mitigate potential risks.

Key points from the guidelines include the restriction to naira-based accounts, reflecting a cautious approach to limit exposure to foreign currencies.

Also, the central bank has upheld its ban on banks holding or trading virtual assets on their behalf. Cash withdrawals from cryptocurrency accounts will be prohibited, promoting a controlled and secure environment for crypto transactions.

To further regulate the sector, the guidelines prohibit clearing third-party checks through crypto accounts and impose limitations on withdrawals to two per quarter.

These measures aim to strike a balance between fostering innovation and ensuring responsible financial practices.

The move by Nigeria’s central bank echoes the broader global trend of regulators adapting to the dynamic nature of the cryptocurrency market.

The guidelines position Nigeria within the cohort of nations actively engaging with and regulating the burgeoning crypto industry.

The African continent has witnessed a varied regulatory landscape, with South Africa requiring crypto firms to obtain licenses by the end of 2023, Botswana passing laws to regulate the sector, and Kenya preparing regulations without outright prohibition.