CBN unveils new rules for crypto accounts, warns banks of sanctions

The Central Bank of Nigeria (CBN) has issued new guidelines for the operation of bank accounts for virtual and digital assets transactions. The guidelines, which were published in a circular in December 2021, mark a policy shift on crypto assets by the apex bank, which had previously banned them from the formal banking sector.

According to the CBN, the guidelines are meant to provide minimum standards and requirements for banking business relationships and account opening for Virtual Assets Service Providers (VASPs) in Nigeria. The guidelines also aim to protect the financial system and customers from uncertainty and fraud risks associated with crypto transactions.

The CBN stated that the guidelines apply to banks and other financial institutions under its regulatory purview. It also stated that it may permit other activities related to virtual/digital assets from time to time.

One of the key features of the guidelines is that cash withdrawals will not be possible from accounts opened for virtual/digital assets transactions. The CBN explained that withdrawals from these accounts will only be possible by transfer or through a manager’s cheque. It also stated that the accounts will only be used for transactions on virtual/digital assets and not for any other purpose.

The CBN further stated that financial institutions shall not open or allow the operation of any account for the business of virtual/digital assets unless that account is designated for that purpose and opened in line with the requirements of the guidelines. The designated account shall only be opened with the approval of senior management of the financial institution.

The CBN warned that it may take any or all of the following sanctions against a financial institution, its board of directors, officers or staff for failure to comply with any of the requirements of the guidelines:

  • Prohibition from opening any further designated account
  • Monetary penalty not below the sum of N2,000,000.00 for any infraction
  • Suspension of the operating licence of a financial institution

The CBN’s policy shift on crypto assets was welcomed by the Lead Partner, Blockchain Solutions Limited, Lucky Uwakwe, who said that it would boost the adoption and regulation of crypto in Nigeria. He said that the CBN had recognised the potential of crypto to enhance the financial inclusion and development of the country.

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