CBN Modifies Crypto Policy: Restricts Cash Withdrawals, Imposes Tight Transaction Rules

Nigeria’s central bank, CBN, has put out new rules for cryptocurrency transactions, days after removing the ban on virtual asset transactions.

CBN brings crypto providers within a banking framework

Last week, the Central Bank of Nigeria relaxed its regulations, permitting virtual asset service providers, including cryptocurrency exchanges, to operate bank accounts, marking a major shift from its earlier ban.

Now, the new guidelines prohibit cash withdrawals and issuance of third-party cheques from holders of crypto bank accounts. Business Post cited CBN circular, noting, “Except for settlement of a virtual/digital assets transaction which shall be done through a transfer to another designated account, the withdrawal shall be only through a managers’ cheque or transfer to an account,”

Nigeria to embrace digital assets after long-standing bans

Nigeria has finally stepped into the realm of digital assets after a heavy ban on transactions of cryptocurrency. The country potentially has the power to become a hub of digital transactions in the region, according to a Google trends analysis.

The ban was imposed in 2021 after a bunch of people used cryptocurrencies to fund a nationwide protest in October 2020.

However, the new guidelines by the country’s central bank stem from the belief that “Nigeria can no longer afford to keep pushing digital assets underground, for obvious economic and security reasons.”

Earlier in May, Nigeria’s Securities and Exchange Commission also started mulling digital rules to allow the listing of tokens.

CBN restricts banks from using digital assets for their use

Despite the new sigh of relief in digital and virtual asset transactions in Nigeria, banks will still not be allowed to use cryptocurrencies for their personal use.  The restrictions come in the wake of stricter regulatory measures globally. This is possibly to ensure that crypto-based transactions are not misused by Nigerians.

CBN has also ordered financial institutions to not open or permit the operation of any account by any person to conduct the business of virtual/digital assets unless that account is designated for that purpose and opened in line with the laid-down guidelines.