Yellow Card Exchange, a pan-African cryptocurrency trading platform, is actively seeking a domestic license after the Central Bank of Nigeria lifted its ban on cryptocurrency trading for banks.
Yellow Card for business expansion in Nigeria
Yellow Card Exchange, with its mission to dominate the African market, is actively exploring strategies to leverage its first-mover advantage through licensing pursuits. Yellow Card, a key player in Africa that offers a similar experience to Jack Dorsey’s Cash App, has faced limitations in Nigeria due to regulatory uncertainty.
This scenario is about to change, as confirmed by Ogochukwu Umeokafor, Director of Product Management at the exchange. In a phone interview with Bloomberg, Ogochukwu said:
“What you have been waiting for has come true. We will get to work on it immediately. We want a regulated environment because it helps us move our business. This will help people feel more confident doing business with us.”
Ogochukwu Umeokafor, Yellow Card Product Director
Yellow Card Exchange has begun the approval process with the Securities and Exchange Commission (SEC) of Nigeria. However, progress was reportedly hindered by the need for a functional corporate account, which was not possible under existing CBN regulations.
With the ban lifted, Nigerian commercial banks can now open accounts for virtual asset service providers (VASPs). Cryptocurrency traders can also operate without fear of asset seizure, as was the norm before. Apart from Yellow Card Exchange, other trading platforms could tap into the Nigerian market by leveraging the cryptocurrency-savvy population.
Nigeria’s Financial Environment
The Central Bank of Nigeria (CBN) has become the first apex bank in Africa to introduce a central bank digital currency (CBDC) called e-Naira. The general acceptance of Bitcoin among the population has led to the involvement of various humanitarian projects in the West African country.
Nigeria’s e-Naira, launched in October 2021, serves as the country’s central bank digital currency (CBDC). Unlike separate digital currencies, it represents a digital version of the national currency pegged at par with the fiat naira. e-Naira is subject to strict access controls by the Central Bank and, although not a financial asset in itself, serves as a digital form of the national currency.
e=Naira’s key objectives include strengthening financial inclusion, reducing remittance costs and minimizing informality in the economy.
However, as of October 2022, its use in Korea has been restricted. In response, the Nigerian government is seeking support to redesign and promote e-Naira. Recognizing their potential in promoting financial inclusion, a strategic approach is needed to define their relationship with traditional currencies and consider whether they complement or replace them.
To encourage greater use of CBDC, the Central Bank of Nigeria is adjusting its e-Naira model.
In February 2021, the Central Bank of Nigeria (CBN) banned cryptocurrency trading due to concerns about money laundering and terrorist financing. Nonetheless, on December 22, 2023, the CBN lifted the ban and issued new guidelines to help financial institutions supervise cryptocurrency trading.
The guidelines set out minimum standards for establishing banking relationships with virtual asset service providers (VASPs), including cryptocurrency exchanges.
The CBN’s updated guidelines emphasized stringent customer KYC and anti-money laundering checks. Even though the ban has been lifted, banks are still prohibited from holding, trading and trading virtual currencies.
The CBN’s decision is consistent with its broader strategy to regulate Nigeria’s cryptocurrency industry, which aims to restore Nigeria’s status as a significant hub for cryptocurrency trading in Africa. The move has garnered support from the local blockchain industry, which has called on Nigeria’s federal government to implement comprehensive and acceptable regulations.