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Nigeria's CBN Relaxes Crypto Regulation in New Policy

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By Dewey Olson - - 5 Mins Read
Smartphone; Nigeria National Flag
Featured Image | Shutterstock
Smartphone; Nigeria National Flag
Featured Image | Shutterstock

 

The Central Bank of Nigeria (CBN) shook things up on December 22, 2020, by changing its stance on cryptocurrencies.

 

The new policy allows banks and other financial institutions to serve crypto users, which is a big change from the previous strict rules.

 

This is in line with global trends towards regulating virtual asset service providers (VASPs) and has gotten the crypto community in Nigeria all excited. In this article, we'll dig into what this policy update means and how cryptocurrencies are becoming more popular in Nigeria.

The Lifting of the Nigeria Crypto Ban

Previously, the CBN had limited transactions involving cryptocurrencies, but with the issuance of the circular, this ban has now been lifted.

 

This development allows cryptocurrency investors in Nigeria to conduct crypto-related transactions through their bank accounts, simplifying their ability to trade and transact with digital assets across various exchanges and payment services.

 

As a response to this significant development, Quidax, a leading cryptocurrency exchange in Africa, has announced its new offer of free bank account deposits and withdrawals for its customers.

 

Moreover, this move by Quidax further facilitates the ease of conducting crypto transactions for Nigerians, encouraging greater participation in the crypto market.

 

While the new guidelines provide more flexibility for crypto users, it is essential to note that banks and financial institutions in Nigeria are still not allowed to hold, trade, or transact in virtual currencies on their behalf.

 

The CBN remains cautious about the potential risks associated with cryptocurrencies, such as money laundering and financing for terrorism (ML/TF).

 

Nigeria has been the leading nation in Africa in terms of cryptocurrency adoption despite the government's restrictive policies. Despite this, Nigerian crypto investors remain optimistic about the changes that new African governments could bring to the crypto sphere.

 

However, by allowing the provision of services to cryptocurrency users, the CBN aims to strike a balance between innovation and regulation in the digital asset space.

Impacts on the Nigerian Crypto Landscape

 The lifting of the crypto ban has sparked optimism among crypto enthusiasts in Nigeria.

 

This policy update signifies a significant step towards integrating traditional banking with the world of cryptocurrencies, providing a secure and regulated environment for digital asset services.

 

Meanwhile, Nigerian companies that previously faced challenges due to the ban now have the opportunity to resume operations and adapt to the evolving crypto landscape.

 

With the popularity of cryptocurrencies rising, it's interesting to note the shift in preferences within the Nigerian crypto market. Stablecoins, particularly the USDT, have witnessed increased adoption compared to Bitcoin in the sub-Saharan country.

 

This preference can be attributed to the stability of stablecoins, as they are pegged to the widely accepted US dollar.

 

Moreover, this offers Nigerians a hedge against inflation and the devaluation of the Nigerian naira, making stablecoins an attractive choice for investors.

 

In summary, lifting the Nigerian crypto ban signifies a game-changing development for the country's crypto ecosystem.

 

By embracing global trends and allowing the provision of crypto-related services, the CBN has showcased its commitment to fostering innovation while ensuring regulatory oversight.

 

Moreover, the newfound flexibility opens up opportunities for Nigerian crypto investors and businesses, encouraging the growth of a vibrant and regulated digital asset market.

 

As Nigeria embraces crypto adoption, the nation's crypto landscape is poised for further expansion and evolution.

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