The CBN hereby has issued Guidelines to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs (Crypto operators) in Nigeria.
According to CBN, this circular supersedes the CBN’s circulars referenced FPR/DIR/GEN/CIR/06/010 of January 12, 2017 and BSD/DIR/PUB/LAB/014/001 of February 5, 2021 on the subject.
The CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures. Current trends globally have however shown that there is need to regulate the activities of virtual assets service providers (VASPs) which include cryptocurrencies and crypto assets.
Despite the new guidelines, banks and other financial institutions are still prohibited from holding, trading and/or transacting in virtual currencies on their own account.
The guidelines can be found below:
- Financial Institutions (FIs) shall obtain authorisation from the CBN for the opening and operation of designated settlement account of SEC’s VASPs/Digital Assets (DA) entities.
- All obligations arising from transactions within the VASPs/DAs entities platform shall be settled into the designated settlement accounts maintained by them in the banks.
- The designated settlement accounts shall warehouse all Naira positions of individuals with the VASPs/DAs.
- The designated settlement account, including any associated linked account for warehousing settlement monies, shall not be interest bearing.
- The details of the transactions on the VASP platform leading to settlement on the designated settlement account shall be accessible online, on real-Ume basis to the Financial Institutions at all times.
- Credit to the designated settlement account shall be for the funding of Naira positions of persons on the VASP/DAs platform.
- Debit from the designated settlement account shall only be in favour of the specific accounts that was used to fund Naira position on the VASP/DAs platform.
- Returns on transactions on the designated settlement accounts shall be rendered to the Bank monthly or at any frequency that the Bank may require.
- The designated settlement account shall not facilitate FX positions of persons on the VASP/DAs platform
- FIs shall ensure that the SEC-licensed VASP/DA entities always maintain a minimum collateral equal to 150% highest net debit position into the designated settlement account (over the past 10 days).
- FIs shall not use the designated settlement account as collateral for credit.
- The settlement cycle for transactions of VASPs/DAs shall be T+3.
- Value shall NOT be given to VASP/DAs before settlement occur or earlier than the settlement cycle.
- FIs shall not facilitate transfer and settlement from the FX positions of persons on the VASP/DAs platform to any foreign account.
- Transfers from the Naira position of persons on the VASP platform into their bank account shall not be more than twice in a quarter.
- FIs shall ensure that only accounts that have completed full KYC process (Tiered accounts subject to exemptions are excluded) can fund or receive from positions on the VASP/DAs platform.
- FIs/NIBSS shall not allow usage/creation of NUBAN accounts by VASPs.
- Transactions on the VASP/DA platform shall only be in Naira.