Nigeria’s Blockchain Sector Calls for Government Regulations

Summary

The blockchain sector in Nigeria has urged the federal government to establish regulations for virtual asset service providers (VASPs) in the country. The Central Bank of Nigeria (CBN) has recently removed constraints on Nigerian banks assisting cryptocurrency transactions. The CBN acknowledged that the global demand for cryptocurrencies necessitates the need for regulations and strong risk management procedures.

Introduction

The Central Bank of Nigeria (CBN) has lifted the ban on Nigerian banks working with digital currencies, which had been enforced for almost two years. In a circular addressed to banks on December 22, the CBN acknowledged that the increasing worldwide demand and usage of cryptocurrencies makes the strict regulations imposed on financial institutions unsustainable. The purpose of the new regulations is to establish guidelines for VASPs in Nigeria and ensure their operations are subject to strong risk management procedures in the banking sector.

Main Points

• The CBN has removed constraints on Nigerian banks aiding cryptocurrency transactions after a nearly two-year ban.
• The global demand and usage of cryptocurrencies have rendered the strict regulations imposed on financial institutions unsustainable.
• The regulations aim to establish ground rules for VASPs in Nigeria and ensure their operations adhere to strong risk management procedures.
• Banks and other financial organizations are still prohibited from using their own accounts for holding, trading, or dealing in cryptocurrencies.
• The blockchain sector in Nigeria has formally requested the government to establish rules to promote the widespread use of blockchain technology.
• A legislative framework is urgently needed to facilitate the integration of blockchain technology into various economic sectors.

Conclusion

The Central Bank of Nigeria has removed constraints on Nigerian banks involved in cryptocurrency transactions, recognizing the need for regulations in response to the global demand for cryptocurrencies. The new regulations aim to establish guidelines for VASPs and ensure strong risk management procedures in the banking sector. Additionally, the blockchain sector in Nigeria has called on the government to establish rules to encourage the broader use of blockchain technology. A legislative framework is urgently required to facilitate the integration of blockchain technology into various economic sectors in Nigeria.