Nigeria’s Central Bank Reopened Bank Accounts to Regulated Crypto Firms

Nigeria’s central bank on December 22, 2023 replaced its prohibition on banks serving cryptocurrency businesses with a supervised account framework for virtual-asset service providers. Circular FPR/DIR/PUB/CIR/002/003 instructed banks and other financial institutions to comply immediately with new guidelines governing those relationships.

The change mattered because it reopened a formal connection between Nigeria’s banking system and regulated digital-asset companies after the Central Bank of Nigeria had cut that connection in February 2021. It was not a blanket legalization of cryptocurrency activity. The December 22 circular preserved a prohibition on banks and other financial institutions holding, trading or transacting in virtual currencies for their own account.

What the central bank changed

The guidelines superseded CBN circulars dated January 12, 2017 and February 5, 2021. The 2021 directive had restricted regulated financial institutions from operating accounts for cryptocurrency service providers, citing money-laundering and terrorism-financing risks, vulnerabilities in the sector and a lack of regulation and consumer protection.

Under the replacement regime, qualifying institutions could open designated accounts for eligible virtual-asset businesses, provide designated settlement accounts and settlement services, and act as channels for foreign-exchange inflows and trade. The permission applied within a compliance framework rather than as ordinary, unrestricted commercial banking.

Eligibility turned on regulatory status. The guidelines covered virtual-asset service providers and related operators, including digital-asset exchanges, custodians and offering platforms, registered by Nigeria’s Securities and Exchange Commission. An applicant needed to supply evidence of a valid SEC licence or authorization, corporate documents, ownership information, management profiles, anti-money-laundering policies and other records required for customer due diligence.

The account itself had to be designated for virtual-asset business. Cash withdrawals and clearance of third-party cheques were prohibited, while financial institutions were required to monitor transactions, maintain records and submit prescribed reports. Those controls showed that the CBN was moving crypto firms into a monitored banking perimeter, not removing financial-crime safeguards.

Why the policy line shifted

The CBN tied the revision to three developments already visible by December 22: international standards calling for supervision of virtual-asset providers, Nigeria’s 2022 money-laundering law recognizing VASPs within the definition of financial institutions, and the SEC’s May 2022 digital-asset rules.

That combination had made the earlier banking restriction increasingly difficult to reconcile with a separate securities-regulatory framework for registering exchanges, custodians, offering platforms and other service providers. The new guidelines created an institutional bridge: SEC status could make a crypto business eligible for a designated bank account, while the CBN retained oversight of the bank providing it.

The policy also acknowledged that cutting firms off from banks had not removed digital-asset activity. Contemporaneous reporting described Nigerians using peer-to-peer routes outside the formal financial sector. Bringing licensed intermediaries back into bank-supervised channels could improve visibility, but that was a regulatory objective on December 22—not a measured result.

What remained unresolved

The circular did not make virtual currencies legal tender, guarantee that an applicant would obtain an account or require every bank to take every eligible crypto company as a customer. It did not approve any particular token, exchange or investment product. Nor did it establish immediate figures for bank onboarding, customer deposits, trading volume or market impact.

The defensible event-day conclusion was narrower: on December 22, 2023, the CBN replaced a broad banking restriction with rules for designated accounts and settlement services for SEC-regulated virtual-asset firms, while keeping banks themselves out of proprietary cryptocurrency activity. That moved Nigeria from banking exclusion toward regulated intermediation, with implementation and market effects still to be tested.