Nigeria slaps strict rules on banks after lifting crypto ban

BLOOMBERG

Nigeria’s central bank has released inaugural guidelines for banks opening cryptocurrency accounts, while retaining its ban on them holding or trading in virtual assets on their own behalf.
The rules, published on the central bank’s website, flesh out the regulator’s decision last month to lift its prohibition on banks operating accounts for crypto service providers.
“Current trends globally have shown that there is need to regulate the activities of virtual assets service providers which include cryptocurrencies and cryptoassets,” it said.
Nigeria joins other African regulators in extending oversight of cryptocurrencies, spurred by a string of corporate collapses capped by the bankruptcy of Bahamas-based exchange FTX in April. The continent’s most populous nation has seen a surge in virtual currency adoption, in part fueled by the steep decline of the nation’s fiat currency.
Only naira-based accounts will be permitted and there will be no cash withdrawals, the central bank said. The restrictions also bar clearing third-party checks through crypto accounts and will limit withdrawals to two per quarter.
South Africa, the backdrop to several of the world’s largest crypto scams, in July ordered crypto exchanges operating in the country to apply for licenses by the end of 2023.
That followed neighbor Botswana passing a law in 2022 to regulate the sector which lawmakers said risked becoming the “Wild West” of finance. Kenya has not licensed cryptocurrency activity but has also declined to outlaw it while it prepares regulations.
Elsewhere, the Bank of Mauritius has been pushing ahead with plans to launch a central bank digital currency as part of a broader strategy to embrace financial technology on the Indian Ocean Island.