Banks Transacting In Virtual Currencies To Pay N2m Fine To CBN


The Central Bank of Nigeria (CBN) has released regulatory guidelines for the operation of cryptocurrency transactions in banks and other financial institutions, warning to impose N2 million fines on any financial institution transacting in virtual currencies.

The development follows the removal of the ban imposed two years ago on cryptocurrency transactions in the Nigerian banking system by former CBN Governor, Godwin Emefiele

In February 2021 the CBN issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers due to the money laundering and terrorism financing risks as well as the absence of regulations and consumer protection measures.

But the CBN in the new rule titled, ‘Guideline On Operation of Bank Account For Virtual Assets Service Providers (VASPs)’, signed by Director, Financial Policy and Regulation Department, Haruna Mustafa, said banks and other financial institutions are still prohibited from holding, trading and/or transacting in virtual currencies on their accounts.

The CBN said, “From the commencement of these Regulations, financial institutions shall not open or permit the operation of any account by any person or entity to conduct the business of virtual/digital assets unless that account is designated for that purpose and opened in line with the requirement of these Guidelines.

“An account opened by these Guidelines shall only be used for transactions on virtual/digital assets and not for any other purpose.

“No cash withdrawals shall be allowed from the account. No third-party cheque shall be cleared from the account.

“Except for settlement of a virtual/digital assets transaction which shall be done through a transfer to another designated account, withdrawal shall be only through a Managers’ Cheque or transfer to an account.”

The guideline further explained that the designated settlement account of SEC’s VASPs/DA entities will be opened by financial institutions with the permission of the CBN.

“All obligations arising from transactions within the VASP5/DAs entities platform shall be settled into the designated settlement accounts maintained by them in the banks.

“The designated settlement accounts shall warehouse all Naira positions of individuals with the VASPs/DAs. The designated settlement account, including any associated linked account for warehousing settlement monies, shall not be interest-bearing.

“The details of the transactions on the VASP platform leading to settlement on the designated settlement account shall be accessible online, on a real-time basis to the FIs at all times. Credit to the designated settlement account shall be for the funding of Naira positions of persons on the VASP/DAs platform.”

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