The Central Bank of Nigeria (CBN) has revealed that cash withdrawals will be prohibited from accounts specifically opened for virtual and digital assets transactions.
The apex bank clarified that withdrawals from these accounts would only be permissible through transfer or by utilizing a manager’s cheque, as outlined in the newly introduced ‘Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers.’
Under the new guidelines, accounts opened in accordance with CBN’s directives can solely be utilized for transactions related to virtual/digital assets and are explicitly restricted from any other purposes.
The guideline explicitly states, “No cash withdrawal shall be allowed from the account. No third-party cheque shall be cleared from the account.” It further specifies that withdrawals can only be facilitated through a manager’s cheque or a transfer to another designated account for settling virtual/digital assets transactions.
This regulatory move comes in the wake of a December circular titled ‘Circular to all banks and other Financial Institutions guidelines on operations of bank accounts for Virtual Assets Service Providers,’ wherein the CBN signaled a shift in its approach to crypto assets.
The circular, signed by the Director of the Financial Policy and Regulation Department, Haruna Mustafa, directed banks to support crypto transactions.
The CBN’s latest policy direction indicates a more open stance towards the regulation of crypto assets, signaling a departure from its earlier stance of restricting crypto assets from the formal banking sector.
The accompanying guideline serves as the framework for the reintroduction of crypto into the formal banking sector.
The CBN stated, “The Guidelines shall apply to banks and other financial institutions under the regulatory purview of the CBN.”
Its objectives include establishing minimum standards and requirements for banking business relationships and account opening for Virtual Assets Service Providers in Nigeria.
The guidelines outline activities financial institutions are permitted to undertake in their operations for Virtual Assets Service Providers, including opening designated accounts, providing designated settlement accounts and settlement services, acting as channels for foreign exchange flows and trade, and any other activity permitted by the CBN.
Addressing the process of opening accounts for virtual asset providers, the CBN emphasized that financial institutions should not open or allow the operation of any account for conducting virtual/digital assets business unless it is designated for that purpose and opened in accordance with the provided guidelines.
The CBN guideline also imposes various requirements aimed at protecting the financial system and customers from uncertainty and fraud risks.
Emphasizing the need for compliance, the apex bank warned that erring banks could face sanctions, including the suspension of their operating licenses.
When the CBN initially announced its policy shift on crypto, Senator Ihenyen, the Lead Partner and Head of Blockchain and Virtual Assets Practice at Infusion Lawyers, expressed optimism, stating, “Nigeria can no longer afford to keep pushing digital assets underground.”
This regulatory development is seen as a step towards ensuring consumer protection and investor safety in the evolving landscape of digital assets in Nigeria, a country leading in crypto adoption on the African continent and globally.
