Thomas Daniels
Nigeria’s highest banking authority elaborated on its decision to reverse the prohibition on cryptocurrencies for financial service providers, establishing explicit guidelines for future operations. The Central Bank of Nigeria (CBN) introduced strict regulations for banks, shifting from a total ban on cryptocurrencies to regulating virtual asset service providers, citing the need to stay in line with international trends driven by blockchain technology and digital assets.
According to the CBN, entities such as cryptocurrency exchanges and digital asset brokers are permitted to open bank accounts denominated in the Nigerian Naira only. The country’s primary banking institution also declared that cash withdrawals are forbidden, and firms are not allowed to process third-party checks through their cryptocurrency accounts. Additionally, there are restrictions on other types of withdrawals, limiting them to two per quarter. In December, Nigeria, the most populous country in Africa, removed its prohibition on cryptocurrency transactions, enabling banks to provide services to virtual asset operators and allowing cryptocurrency businesses to obtain commercial licenses.
Moreover, a coalition of local financial organizations and blockchain companies is developing Nigeria’s inaugural regulated stablecoin, cNGN, which may potentially complement eNaira, the digital currency issued by the CBN.
Nevertheless, the CBN cautioned that banks are still prohibited from owning or trading cryptocurrencies due to concerns over fraud and financial risks.
With this initiative, Nigeria is joining other African nations in acknowledging Bitcoin and other cryptocurrencies as the adoption of blockchain technology rapidly progresses throughout the continent. Nigeria is currently ranked second on the Global Crypto Adoption Index Top 20 published by Chainalysis, earning it the title of the continent’s “giant”.
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