Nigeria lifts ban on crypto trading, banks to create naira stablecoin
The Central Bank of Nigeria (CBN) has unveiled guidelines for virtual assets, marking a significant shift that allows virtual assets service providers (VASPs), encompassing cryptocurrencies and crypto-assets organizations, to establish accounts with Nigerian banks.
Issued to all banks and financial entities on December 22, 2023, the guidelines outline the conditions for virtual assets providers to open accounts. Despite this allowance, the CBN underscored that banks and financial institutions remain prohibited from holding, trading, or transacting in virtual currencies through their accounts.
This development follows a two-year period during which the apex bank restricted banks and financial institutions from engaging in account operations for cryptocurrency service providers. The CBN clarified that the issuance of these guidelines is a response to current global trends, emphasizing the necessity of regulating the activities of virtual VASPs in the evolving financial landscape.
Key Takeaways
The CBN's latest move forms part of a string of sweeping reforms initiated by the new presidential regime over the last six months meant to undo unorthodox and unfriendly policies adopted by the previous administration. In a parallel development, top-tier Nigerian banks are actively involved in the development and management of the cNGN token, a novel stablecoin designed to bring benefits to both token holders and the Nigerian economy. This stablecoin is fully supported by tier 1 banks, maintaining a one-to-one peg with each Naira (N1) held by these financial institutions. Operating similarly to major stablecoins, the cNGN token showcases interoperability features with other public blockchains, facilitating seamless global transfers and expanding its utility beyond domestic boundaries. The cNGN project has garnered collaboration from key partners, including Access Bank, Sterling Bank, Providus, Korapay, First Bank, Interstellar, Interswitch, Budpay, and Convexity. This marks a significant collaborative effort within the Nigerian financial sector, showcasing the commitment of major players to explore innovative solutions in the realm of digital assets and blockchain technology.
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