Central Bank of Nigeria Adopts Stringent Rules for Crypto Transactions

The Central Bank of Nigeria (CBN) has made a tactical change by enforcing strict controls on banks that deal with virtual assets instead of outright prohibiting cryptocurrencies. The necessity to adapt to worldwide trends that embrace blockchain technology and digital assets is what is causing this change.

Regulatory Measures for Crypto Operators

Virtual asset service providers, such cryptocurrency exchanges and digital asset brokers, are only permitted to create bank accounts denominated in the Naira, the local currency, according to the CBN’s new regulations. This measure differs from Nigeria’s prior general prohibition on cryptocurrency transactions.

Cash withdrawals from these cryptocurrency-related accounts are severely forbidden under the new regulations. Furthermore, businesses operating in this industry are prohibited from using their cryptocurrency accounts to pay third-party checks. The CBN is exercising caution by allowing only two categories of withdrawals each quarter.

Nigeria has changed its regulatory approach to cryptocurrencies significantly. The most populous nation in Africa removed the restriction on cryptocurrency transactions in December. This ruling cleared the path for cryptocurrency companies to get business licenses and gave banks the authority to offer services to operators of virtual assets.

The CBN still views cryptocurrencies with caution despite the move toward regulation. The central bank still forbids banks from trading digital assets or retaining cryptocurrency holdings. This cautious attitude stems from worries about financial dangers and fraud in the cryptocurrency market.

Notable news: a group of regional financial institutions and blockchain companies are actively creating cNGN, Nigeria’s first regulated stablecoin. Like the digital currency issued by the central bank, eNaira, this one also seeks to offer stability and regulatory monitoring.

Nigeria launched eNaira, a digital currency issued by the central bank, before investigating the potential of controlled stablecoins (CBDC). The introduction of eNaira by the CBN fits with a global trend in which central banks are investigating and utilizing digital currencies.

Nigeria has joined other African countries in recognizing the importance of Bitcoin and cryptocurrencies with these regulatory changes. Africa is witnessing a rapid upsurge in the use of blockchain technology. Nigeria, commonly known as the “giant of Africa,” is ranked second on Chainalysis’ Global Crypto use Index Top 20.