Nigeria has long been at the forefront of cryptocurrency adoption in Africa. However, the Central Bank of Nigeria (CBN) had instituted a ban preventing banks from servicing crypto exchanges and digital asset brokers. This pushed many Nigerian crypto companies to operate in a legal gray area.
Now, the CBN has reversed course, publishing new guidelines that aim to regulate rather than outright ban cryptocurrency activity. Their stated rationale is to bring policies in line with the global trends towards adopting blockchain technology and digital assets.
Specifically, the regulations allow virtual currency firms to open naira-denominated accounts with Nigerian banks. Cash withdrawals and clearing third-party checks through these accounts will be prohibited or strictly limited – no more than two withdrawals per quarter. The rules also reinforce that while crypto companies can now bank domestically, financial institutions themselves are still barred from holding cryptocurrencies or trading digital assets.
By relaxing the previous crypto transaction restrictions, regulators have opened the door for virtual currency exchanges and brokers to acquire licenses and fully conduct business legally in Nigeria. This is timely, as a consortium of Nigerian companies is developing the nation’s first regulated stablecoin pegged to the naira, called cNGN.
Ghana and Kenya have also recently warmed to cryptocurrencies, but Nigeria has already ranked highly as the second-largest adopter worldwide behind only Vietnam. The CBN had made some concessions before, approving a pilot of its central bank digital currency called eNaira. However, now the government is signaling a new level of acceptance towards decentralized private cryptocurrencies.
#Cryptocurrency #Nigeria #CentralBank
