Guidelines on the Operations of Bank Accounts for Virtual Assets Service Providers

Issued by the CBN on 22 December 2023, these guidelines reversed the CBN's February 2021 prohibition that had barred banks and other financial institutions from servicing cryptocurrency-related businesses, and instead set out the controlled basis on which financial institutions may now provide banking services to Virtual Assets Service Providers (VASPs) and digital-asset entities. The instrument represents Nigeria's pivot from prohibition to supervised engagement with crypto-assets, aligning the banking system with the Securities and Exchange Commission's regulatory regime for digital assets and with FATF standards on virtual assets. The guidelines apply to banks and other financial institutions and to the VASPs they serve, which must be licensed by the SEC. They permit financial institutions, with prior CBN authorisation, to open and operate Designated Settlement Accounts for SEC-licensed VASPs and digital-asset entities. The accounts are tightly constrained: transactions on the VASP platform must be settled in Naira; the accounts may not be used to facilitate foreign-currency positions; balances may not be used as collateral for credit; transfers abroad are restricted; and transfers from a customer's Naira position to their own bank account are capped (no more than twice per quarter). Financial institutions remain prohibited from holding, trading or transacting in virtual currencies on their own account. The guidelines impose enhanced KYC and AML/CFT controls, restrict the use of standard NUBAN accounts by VASPs, and require ongoing monitoring and reporting of suspicious activity. The CBN supervises and enforces through authorisation conditions, reporting and sanctions. By providing a compliant banking channel for licensed crypto businesses while preserving prudential and AML safeguards, the instrument brings virtual-asset settlement within the central bank's fintech perimeter.

1. 1Lifts the February 2021 crypto banking restriction; only SEC-licensed VASPs may be serviced
2. 2Banks may open Designated Settlement Accounts for VASPs/digital-asset entities with prior CBN authorisation
3. 3Account constraints: Naira-only settlement, no FX facilitation, no use as credit collateral, restricted foreign transfers, withdrawals to own account capped (twice per quarter)
4. 4Financial institutions still barred from holding or trading virtual currencies on own account
5. 5Enhanced KYC/AML-CFT, restrictions on NUBAN use by VASPs and suspicious-activity monitoring/reporting
6. 6CBN supervision via authorisation conditions, reporting and sanctions