Nigeria's Lifted Crypto Ban: A Potential Surge in Usage Ahead

• Nigeria's Central Bank Uplifts Ban on Local Banks Servicing Crypto Firms
• Rescission of 2021 Directive
• Elevating Crypto Adoption
• Impetus for Change

Nigeria's Central Bank Uplifts Ban on Local Banks Servicing Crypto Firms

The Central Bank of Nigeria (CBN) has revoked its former prohibition that barred local banks and other financial institutions from providing services to cryptocurrency companies. This significant move is expected to encourage the use of digital assets in Nigeria which is among the fastest growing adopters of these assets globally.

Rescission of 2021 Directive

The announcement of this policy change came last week, overruling a directive issued in 2021. The directive had prohibited financial establishments from facilitating transactions involving cryptocurrency. The central bank at that time had to reassure the public that it was not imposing a total ban on cryptocurrency trading within the country. Despite these restrictions, cryptocurrency usage continued to increase as users adopted peer-to-peer trading platforms.

Elevating Crypto Adoption

The lifting of these restrictions on cryptocurrency exchanges and service providers could stimulate further adoption. For example, Yellow Card, a significant pan-African cryptocurrency exchange, has expressed that it will apply for a cryptocurrency license in Nigeria. This follows frameworks that were introduced in May this year.

The new policy establishes a regulated environment which Yellow Card expects will lead to an increase in user adoption and engagement in the near future, Lasbery Oludimu, the Chief Data Protection Officer of Yellow Card, commented to local news platform Nairametrics. He added, The regulatory framework provides necessary clarity, fostering trust and confidence among users, and will likely attract even more individuals and businesses to the crypto world.

Impetus for Change

The yet-to-be-published CBN circular FPR/DIR/PUB/CIR/002/003 cites the global trend of cryptocurrency regulation as the motivator behind this policy change. International standard-setters, including the Financial Stability Board (FSB) and the International Monetary Fund (IMF), have advised the supervision of the cryptocurrency industry rather than complete prohibition. According to a Nigerian personality in the crypto world, this CBN circular is akin to a Christmas present.

Edited by Jonathan Stoker