Central Bank of Nigeria provides guidelines for banks’ virtual currency-related services

Rules for virtual currency corporate accounts

On the 2nd, the Central Bank of Nigeria posted on its official website guidelines for banks to provide account services to crypto-asset (virtual currency) companies.

In 2021, Nigeria, which boasts Africa’s largest population and gross domestic product (GDP), issued a notice prohibiting virtual currency exchanges from providing bank account services due to money laundering and lack of regulation. .

However, in December of last year, this ban was lifted due to the “increasing global demand for and introduction of virtual currencies.” This time, we have announced the detailed items for providing the service.

Financial institutions are now able to open accounts with virtual currency exchanges and custody companies, and provide payment services.

Furthermore, financial institutions such as banks are still prohibited from holding or trading virtual currencies in their own accounts.

In Nigeria, gold and Bitcoin (BTC) have been attracting attention as safe havens to protect assets due to the decline in the value of the Naira, the legal currency. It also ranks second in the 2023 ranking of countries where cryptocurrencies are used at the grassroots level, as announced by blockchain analysis company Chainalysis.

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Contents of the guidelines

In its guidelines, the Central Bank of Nigeria states that when opening an account, a business license from the Securities and Exchange Commission of Nigeria and documents related to the directors of the company will be required.

It also stipulates that the account must only be used for virtual currency transactions and not for any other purpose, and that it must not be used to withdraw cash or clear third-party checks.

Additionally, each month, financial institutions report the number of designated accounts opened, the amount of transactions made in each account, details of the other party to the transactions, incidents of fraud or theft, if applicable, and the number of customer complaints and corresponding remediation. Measures must be reported to the authorities.

It also requires measures against money laundering, terrorist financing, and proliferation financing (funding of weapons of mass destruction).

The financial institution is responsible for monitoring and supervising all activity on the account and is responsible for any unauthorized use of the account. Failure to comply with the guidelines may result in fines.

Naira-denominated stablecoin “cNGN”

The Central Bank of Nigeria has just allowed the naira stablecoin cNGN project to proceed under its regulatory sandbox. The African Stablecoin Consortium (ASC) announced on the 4th.

cNGN is a stablecoin pegged 1:1 with Nigeria’s legal currency, the Naira. The ASC said it looks forward to working with regulators such as the Central Bank of Nigeria, the Securities and Commodities Exchange and the Financial Intelligence Service to ensure legal compliance, transparency and consumer protection.

ASC stated that cNGN aims to complement Nigeria’s Central Bank Digital Currency (CBDC) e-Naira, serve as a bridge between fiat currencies and digital assets, and broker fast and secure international transactions denominated in Naira. There is.

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