Key Highlights
- The CBN launched a pilot program to supervise 6 selected crypto firms in Nigeria.
- The program focuses on money laundering and monitoring how companies check customers and transactions.
- The banks said joining the program does not give a license and requires companies to submit monthly reports.
The Central Bank of Nigeria (CBN) has launched a pilot program this week to supervise virtual asset service providers (VASPs) to reduce the risk of money laundering and to counter terrorism financing in the country.
According to the official release, authorities have selected companies for the program, including cNGN (a stablecoin pegged to the Naira), Flutterwave, Juicyway, KoinKoin, KuCoin, and Paystack.
The program is expected to follow rules from the Financial Action Task Force (FATF), including the Travel Rule, which requires companies to share information about who sends and receives money when transferring digital assets.
How the pilot works
The CBN said the pilot does not grant a new license or regulatory approval. Instead, it is a way to observe how they operate, improve their rules and processes, and make sure they follow laws.
“This pilot does not alter, replace or supersede the existing regulatory framework governing virtual assets in Nigeria or the mandates of other competent authorities,” the bank said.
Participating firms are required to submit monthly reports to show how they manage their customer onboarding and look for suspicious activity. The banks also said they would track transactions and manage payments that cross borders.
In addition, firms are required to work closely with the CBN and the Nigeria Financial Intelligence Unit (NFIU). The bank stated that all data collected will be treated as confidential, in line with the Nigeria Data Protection Act 2023.
Nigeria’s history with cryptocurrency
The pilot is the next step in Nigeria’s evolving approach to digital assets. In 2021, the CBN issued a circular preventing banks and financial institutions from providing services to crypto exchanges, citing risks of fraud and money laundering.
As a result, many crypto firms rely on where individuals trade directly with each other. But even with this restriction, the country manages to become one of the world’s most active markets for digital assets, with people using crypto to send remittance funds, save, and protect their money from inflation.
By late 2023, the CBN lifted the restriction and allowed banks to support crypto trading, but this time, under a strict condition. Around the same time, the Securities and Exchange Commission (SEC) introduced rules and licensing pathways for digital asset platforms.
The new pilot reflects a move toward closer supervision rather than outright restrictions, allowing regulators to work directly with firms while enforcing compliance standards.
The CBN said the program will run in phases, with later stages already planned and not open to new participants.
Also Read: Nigeria Sees $96B in Crypto Trades as Regulators Move to Tighten Grip
