Nigeria’s Central Bank recently revoked their stringent anti-crypto measures, which had prohibited banks from processing crypto-related transactions for almost two years. This move coincides closely with the collaborative efforts of Nigerian banks to introduce a new stablecoin, cNGN.
The CBN noted the global interest and adoption of cryptocurrencies had led to a rethinking of the severe restrictions imposed in 2020. In order to fortify risk management protocols within the banking sector, the regulator released a revised set of guidelines, establishing new standards for opening accounts and banking relationships with virtual asset services providers (VASPs).
Before initiating the account setup, banks must obtain the Business Value Number (BVN) from all members of management of crypto businesses. Additionally, firms must be licensed by the CBN and registered with the Nigerian Securities Exchange Commission.
In February 2021, the CBN will ban traders from using traditional banks to conduct crypto-related business and instruct banks to quickly identify and close cryptocurrency trading accounts.
Meanwhile, major local banks – Access Bank, Sterling Bank, Providus, Korapay, First Bank, Interstellar, Interswitch, Budpay and Convexity – are collaborating to develop the cNGN stablecoin, which is backed and tied to the Nigerian naira, the country’s fiat currency. This stablecoin is a complement to the eNaira, Nigeria’s central bank digital currency (CBDC), which is still struggling to gain widespread adoption after its launch.
According to Olumide Adesina, a journalist, the CBN allowed banks to facilitate blockchain technology due to the cumbersome processes the Nigerian SEC designed to operate a digital service.
Nigeria is one of the most crypto-friendly jurisdictions in the world, according to Chainalysis. The country ranks second on its Global Crypto Adoption Index, and leads the African region in raw transaction volume. Given Nigeria’s economic uncertainties, many citizens are exploring financial alternatives, enhancing the cryptocurrency’s value proposition.