The Central Bank of Nigeria (CBN) has issued operational
guidelines on virtual assets service providers (VASPs) to all banks and other
financial institutions (OFIs).
Released on Friday, the guidelines are contained in a
circular dated December 22, 2023, and signed by Haruna Mustapha, CBN’s director
of the financial policy and regulation department.
According to the CBN, VASPs means any entity that conducts exchange between virtual assets
(cryptocurrencies) and fiat currencies, and transfers of virtual assets.
The development signals a shift from CBN’s initial position
which restricts crypto transactions.
In February 2021, CBN issued a circular to deposit money
banks (DMBs), non-bank financial institutions (NBFIs), and OFIs to close
accounts of persons or entities involved in cryptocurrency transactions within
their systems.
The regulator further warned local financial institutions
against dealing in crypto assets or facilitating payments for crypto exchanges.
The apex bank cited concerns over money laundering (ML),
terrorism financing (TF), cybercrime, and the volatility of cryptocurrencies as
reasons for the ban.
In its latest circular, however, the CBN directed all banks
and OFIs to carry out cryptocurrency services.
The regulator said commercial banks must fully comply with
the provisions of the guidelines on VASP.
“Current trends globally have shown that there is a need to
regulate the activities of virtual assets service providers (VASPs) which
include cryptocurrencies and crypto assets,” the CBN said.
“Following this development, the Financial Action Task Force
(FATF) in 2018 also updated its Recommendation 15 to require VASPs to be
regulated to prevent misuse of virtual assets for ML/TF/proliferation of
weapons of mass destruction (PF).
“Furthermore, Section 30 of the money laundering (Prevention
and Prohibition) Act, 2022 recognizes VASPs as part of the definition of a
financial institution.
”In addition, the Securities and Exchange Commission (SEC)
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
guidelines to guide to financial institutions under its regulatory purview in
respect of their banking relationship with VASPs in Nigeria.
“The guidelines supersedes the CBN’s circulars 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.
“However, banks and other financial institutions are still
prohibited from holding, trading, and/or transacting in virtual currencies on
their account.”
On May 28, 2023, President Muhammadu Buhari signed the
finance bill into law.
The law introduced a 10 percent tax on gains on the disposal
of digital assets including cryptocurrency.
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