The Central Bank of Nigeria (CBN) has introduced guidelines that prohibit cash withdrawals from accounts established for transactions involving virtual and digital assets. The CBN clarified that withdrawals from these accounts must be conducted through transfers or manager’s checks, emphasizing the importance of adhering to the newly established “Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers.”
According to the guidelines, applicable to banks and financial institutions under the regulatory purview of the CBN, the objectives include setting minimum standards and requirements for banking relationships and account opening for Virtual Assets Service Providers in Nigeria.
Financial institutions are now authorized to engage in various activities related to virtual asset service providers, such as opening designated accounts, providing designated settlement accounts and settlement services, acting as channels for foreign exchange flows and trade, and other activities permitted by the CBN.
Regarding the opening of accounts for virtual asset providers, the CBN specified that financial institutions should not open or permit the operation of any account for conducting virtual/digital asset business unless the account is designated for that purpose and opened in compliance with the guidelines.
The CBN also outlined stringent requirements aimed at safeguarding the financial system and customers from uncertainties and fraud risks. The guidelines stress the importance of adherence, with potential sanctions, including the suspension of a bank’s license, for failure to comply.
Notably, the document emphasized that accounts formed in accordance with these guidelines are solely for transactions involving virtual or digital assets. Cash withdrawals from these accounts are explicitly prohibited, and withdrawals can only be made by manager’s check or account transfer, excluding virtual or digital asset transactions.
This move follows the CBN’s shift in policy regarding crypto assets, signaling a more regulatory approach compared to its earlier stance of restricting crypto assets from the formal banking sector. The guidelines aim to provide a framework for reintroducing crypto into the formal banking sector while emphasizing regulatory oversight for consumer protection and investor safety.