The Central Bank of Nigeria (CBN) recently rolled back stringent anti-cryptocurrency measures that had barred banks from processing cryptocurrency-related transactions for nearly two years. The move is in line with joint efforts among Nigerian banks to introduce a new stablecoin called cNGN.
The CBN noted that global interest and adoption of cryptocurrencies has prompted a reconsideration of the severe restrictions imposed for 2021.
CBN reveals stringent requirements.
Nigerian regulators have released revised guidelines setting standards and prerequisites for banking relationships and account openings for virtual asset service providers (VASPs).
Among these, banks are required to collect the cryptocurrency company’s executive Bank Verification Number (BVN) before starting account setup. The CBN mandated that cryptocurrency companies must obtain a license from the Securities and Exchange Commission of Nigeria. Additionally, these companies must register with their country’s Corporate Affairs Commission before gaining account access.
These guidelines strengthen risk management protocols within the banking sector, particularly as they relate to the operations of licensed VASPs. Regulators emphasized that financial institutions cannot use their accounts to hold, trade, or conduct transactions with cryptocurrencies.
In February 2021, the CBN banned traders from using traditional banks for cryptocurrency-related transactions and directed banks to immediately identify and close accounts involved in cryptocurrency trading.
Nigerian banks unite for cNGN
Meanwhile, major local banks Access Bank, Sterling Bank, Providus, Korapay, First Bank, Interstellar, Interswitch, Budpay, and Convexity are collaborating to develop the cNGN stablecoin.
cNGN is backed and pegged to the Nigerian Naira, Nigeria’s fiat currency. This stablecoin complements eNaira, Nigeria’s Central Bank Digital Currency (CBDC). Nigerian eNaira has struggled to gain widespread adoption since its launch.
“The main reason the CBN allowed the banks is because they want the financial system to support/promote blockchain technology and are aware of the cumbersome process (Nigeria) SEC has designed to operate digital services,” said journalist Olumide Adesina. said: explained.
Read more: The Best Stablecoins Guide for 2024
Nigeria stands out as one of the most cryptocurrency-friendly jurisdictions globally. According to Chainalytic, the country ranks second in the global cryptocurrency adoption index. Nigeria also leads the African region in raw transaction volume.
“Given the economic uncertainty in Nigeria, many citizens are seeking financial alternatives, strengthening the value proposition of cryptocurrencies,” Chainalytic said.
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