While Nigeria’s central bank now allows banks to open crypto accounts, it maintains tough restrictions, including a ban on trading these assets for their own account. A major development in a country where owning bitcoins was until recently illegal.
Nigerian banks in strict mode after ban ends
The CBN (Central Bank of Nigeria) banned Nigerian banks in 2021 from offering any service related to cryptocurrencies. Faced with growing demand, it partially lifted this ban last December, allowing banks to open accounts for virtual asset service providers (VASP).
However, the news guidelines published this week set very strict rules. Only naira accounts are permitted, cash withdrawals are prohibited, and transfers from third parties are prohibited to these specific accounts. The CBN clearly seeks to maintain very tight control over crypto-related flows.
This policy is part of a global movement of reinforced regulation of the crypto sector, in response to its increasingly massive adoption. Several African countries, like South Africa and Botswana, have recently passed laws to better regulate digital assets.
But it is above all the European Union which has taken a lead in this area with its MiCA regulation. The overall objective is to promote technological innovation while further protecting investors, after a series of resounding bankruptcies of major players in 2022, dramatically illustrated by the rout of FTX.
Towards progressive crypto regulation in Nigeria
Despite these restrictions, Nigeria remains one of the leaders in crypto adoption in Africa. In a country where inflation has devalued the local currency, many Nigerians are turning to cryptos to save or receive funds from the diaspora. The third largest user in the world, the country saw the annual volume of transactions jump by 9% between 2022 and 2023, approaching $60 billion, according to Chainalysis.
However, Nigeria has long maintained a repressive position, completely banning crypto in 2021 before timidly legislating in 2022. With this new “small dose” regulation, the country recognizes that the rise of crypto is inevitable and that it It’s better to accompany him.
Although cautious, this progress shows that the Nigerian authorities have learned their lesson: no one can permanently hinder the adoption of cryptocurrencies. Nigeria is thus beginning to come to terms with a reality that is set to take up more and more space in its economy.
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