The Central Bank of Nigeria has announced that cash withdrawals from accounts formed for transactions involving virtual and digital assets will not be permitted.
The apex bank clarified that withdrawals from these accounts could only be made by transfer or manager’s check. A recent set of “Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers” made this information clear.
The bank states that an account formed in accordance with its new policies may only be used for transactions involving virtual or digital assets.
The guideline read in part, “No cash withdrawal 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, the withdrawal shall be only through a managers’ cheque or transfer to an account.”
In a December circular titled, ‘Circular to all banks and other Financial Institutions guidelines on operations of bank accounts for Virtual Assets Service Providers,’ with reference number FPR/DIR/PUB/CIR/002/003, and signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa, the banking regulator announced a policy change on crypto assets and directed banks to begin to aid crypto transactions.
In contrast to its previous stance of prohibiting cryptocurrency assets from being used in traditional banking, the bank declared in its new policy direction that it was more receptive to the idea of regulation.
The circular and accompanying guidelines are intended to act as a foundation for the return of cryptocurrency into the official banking industry.
Commenting on the guideline, the CBN said, “The Guidelines shall apply to banks and other financial institutions under the regulatory purview of the CBN.”
Part of the objectives read, “Provide minimum standards and requirements for banking business relationships and account opening for Virtual Assets Service Providers in Nigeria.
Financial institutions may now open designated accounts, provide designated settlement accounts and settlement services, act as channels for FX flows and trade, and engage in any other activity that the CBN may from time to time permit in their operations of accounts for Virtual Assets Service Providers, in accordance with the guidelines.
Commenting on how virtual asset providers can open accounts, the apex bank noted, “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.
“The designated account shall only be opened with the approval of senior management of the FI.”
An wide list of additional standards is provided by the new CBN guideline, all of which are intended to safeguard customers and the financial system from fraud risks and uncertainty.
The top bank emphasized that financial institutions must follow its rules and that failure to do so could result in the suspension of their license.
The document read in parts, “Notwithstanding the powers of the CBN under the BOFIA 2020 and in addition to the use of remedial measures in these Guidelines, the CBN may take any or all of the following sanctions against a Fl, its board of directors, officers or staff for failure to comply with any of the requirements of these Guidelines:
“Prohibition from opening any further designated account; Monetary penalty not below the sum of 2,000,00O.00 against the FIs, members of its board, senior management, and any staff, for any infraction. Suspension of the operating licence of a Fl.”
Senator Ihenyen, Lead Partner and Head of Blockchain and Virtual Assets Practice at Infusion Lawyers, told The HowNG that the CBN had changed its policy regarding cryptocurrencies. “Thankfully, our regulators will now work together to ensure consumer protection and investor safety.
“Nigeria can no longer afford to keep pushing digital assets underground, for obvious economic and security reasons, especially when you are number on in crypto adoption in Africa and a leading market in the globe.”
