SEC to lead crypto regulation as CBN lifts restrictions
The Central Bank of Nigeria (CBN) has lifted restrictions on virtual assets service providers (VASP), enabling them to operate accounts with banks and other financial organisations.
The CBN, however, said the banks are still not allowed to hold, trade, or transact in virtual currencies on their accounts.
A crypto exchange operator who spoke to BusinessDay on condition of anonymity said it is a signal for “good times ahead” for the cryptocurrency industry in Nigeria.
In February 2021, the CBN under Godwin Emefiele, slammed a restriction on banks providing accounts for exchanges and persons exposed to cryptocurrency. The CBN ordered the closure of all accounts operated by the crypto businesses.
“The Nigerian crypto ban hasn’t been lifted. They haven’t said anything new from what the SEC has been saying for 2 years. They’re only playing catch-up. I’m still not sure why everyone is running victory laps,” said a blockchain expert who also did not want to be mentioned.
Other crypto experts said the guideline doesn’t lift the ban on cryptocurrency operation, rather it only shows a shift in the body language of the apex bank.
“Only a few fatal things like T+3 settlement. Some things are not clear, like the twice a quarter withdrawal. SEC license also precludes small players (N30m reg fee and N500m paid-up capital), so a lot to iron out. But better this that the narrative that there’s a ‘crypto ban’,” said Laolu Samuel Biyi, co-founder of Busha.
The CBN is battling the worst macroeconomic indices with the naira continuing to weaken and inflationary forces dampening consumer spending. Also, the financial regulator is struggling to explain why there is a naira scarcity that is now affecting business operations and contributing to the pressures people are feeling going into the holiday. It has blamed banks for not releasing the cash they received from the banks and individuals for hoarding the cash they got from banks in a panic the scarcity will linger.
Experts say it is therefore possible that the decision to lift restrictions on the crypto industry is part of the low-hanging fruits the CBN is leveraging to ease pressures in the country.
“They’re basically saying SEC will now take the lead on VASPs, a far departure from what it was during Meffy’s time. This new move was done to meet the FATF standard on AML/CTF for digital assets, similar to what South Africa did. Execution is what will make the difference. We’ve never been lacking in regulations,” said the expert.
The industry is also not sure what the scope of the 12 page guideline allows the crypto businesses to do. In the meantime, VASPs are mandated to have up to N500 million in a Nigerian bank to get a license. With the ban, VASPs couldn’t have an account.
“I think now CBN will allow them to open bank accounts, but will any VASP deposit N500m to get a license? The answer is no,” the expert said.
