REGULATION | The Central Bank of Nigeria Lifts the 2021 Banking Restrictions on Cryptocurrency Exchanges and VASPs

The Central Bank of Nigeria (CBN) has published new guidelines for banks and local financial institutions allowing them to create accounts with virtual asset service providers (VASPs).

In a circular sent to the banks and financial institutions in Nigeria, the Central Bank (CBN) guided that the new regulation supersedes previous instructions on working with VASPs.  In February 2021, the central bank ordered deposit-taking financial institutions to immediately close accounts transacting in or operating cryptocurrency exchanges, saying such deals are ‘prohibited.’

CBN Circular on lifting the banking ban on VASPs (crypto companies).

— Uyoyo (@Uyoyo_O) December 22, 2023

The circular, sent to banks on December 22 2023, acknowledged that the escalating global demand and acceptance of cryptocurrencies render it unreasonable to uphold the strict limitations imposed on financial institutions in 2021.

According to CBN, the provided guidelines seek to set forth the minimum standards and prerequisites for initiating banking associations and account openings for virtual asset service providers (VASPs) within Nigeria.

The guidelines clearly stipulate what constitutes VASPs and activities as any entity that conductions one of more of the following activities or operations for or on behalf of another person:

Exchange between virtual assets and fiat currencies
Exchange between one or more forms of virtual assets
Transfer of virtual assets
Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets, and
Participation in and provision of financial services related to an issuer’s office and/or safe of a virtual asset

The guidelines also explicitly mention the eligible stakeholders, which includes:

Commercial and merchant banks
Payment Service Providers (restricted to those that are involved in settlement for third parties)
All entities registered by the Securies and Exchange Commission (SEC Nigeria) to conduct the business of digital/virtual assets services provision and shall include:

– Virtual Assets Service Providers

– Digital Asset Custodian

– Digital Asset Offering Platform

– Digital Asset Exchange

– DAX Operator

– Any other entity that may be categorized by the CBN from time to time


Major provisions of the new Guidelines include the following:

VASPs will now require a license from the Securities and Exchange Commission (SEC)

VASPs must meet other account/opening/documentation requirements of the CBN

A number of restrictions are now placed on the bank accounts of VASPs

Financial institutions that maintain banking relationship with VASPs will now be required to monitor their VASP customer accounts and make monthly returns to the CBN

Before any financial institution provides a designated account for settlements for VASPs purposes, it must obtain CBN’s authorization

Financial institutions must establish risk management systems in order to prevent money laundering and other illicit transactions involving VASPs

Financial institutions must ensure they put consumer protection measures in place to efficiently handle customer complaints


Furthermore, the guidelines are designed to promote strong risk management practices within the banking sector regarding the operations of licensed virtual asset service providers (VASPs).

Nevertheless, the statement underscores that financial institutions are explicitly forbidden from possessing, trading, or engaging in cryptocurrency transactions through their own accounts.



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