CBN Restricts Crypto Bank Account Operators From Withdrawing Cash

The Central Bank of Nigeria (CBN) has rolled out stringent measures affecting cash withdrawals from accounts primarily used for virtual and digital assets transactions, a move that has sent ripples across the financial landscape.

In a newly introduced ‘Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers,’ the apex bank has mandated that withdrawals from these accounts will only be feasible through transfers or manager’s cheques, effectively restricting any form of cash withdrawal.

This directive, disclosed in a recent circular titled ‘Circular to all banks and other Financial Institutions guidelines on operations of bank accounts for Virtual Assets Service Providers,’ signifies a marked shift in the CBN’s stance on crypto assets. The prior approach of barring crypto assets from the formal banking sector has transitioned into a regulated paradigm, aiming to reintegrate crypto into the formal banking system.

According to the guidelines, accounts created for virtual/digital assets transactions are mandated solely for those transactions and cannot be utilized for any other purpose. Withdrawals from these accounts will strictly be permitted through transfers to other designated accounts or by obtaining a manager’s cheque.

The CBN explicitly stated that these regulations apply to banks and financial institutions under its regulatory purview. These guidelines aim to establish minimum standards and prerequisites for banking relationships and account openings for Virtual Assets Service Providers (VASPs) operating in Nigeria.

Financial institutions are now empowered to engage in various activities concerning VASPs, including opening designated accounts, facilitating settlement services, managing foreign exchange flows and trade, and undertaking additional activities authorized by the CBN.

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Nonetheless, the CBN has emphasized the criticality of strict compliance with these guidelines. Failure to adhere could result in severe consequences, including the suspension of operating licenses, substantial monetary penalties not less than ₦2,000,000 against institutions, their boards, senior management, and staff for any infractions.

The shift in the CBN’s policy on crypto assets has stirred both attention and support. Senator Ihenyen, the Head of Blockchain and Virtual Assets Practice at Infusion Lawyers, commended the move, underscoring the need for regulating digital assets to ensure consumer protection and investor safety. He emphasized Nigeria’s influential role in crypto adoption, advocating against keeping digital assets underground for economic and security reasons.