ABUJA - Three years ago, when the Central Bank of Nigeria (CBN) barred commercial banks from carrying out cryptocurrency transactions, the then-governor Godwin Emefiele gave a definitive reason in an appearance before Nigeria’s Senate. “We know enough at this stage to decide that a continuation of these opaque activities significantly threatens the safety and soundness of our financial system,” he declared.

But last month, Emefiele’s successor went in a different direction.

Citing “current global trends,” the CBN said it now wants to regulate providers of virtual assets. It lifted the February 2021 ban, permitting banks to resume relationships with crypto trading platforms. Certain conditions, including valid licensing by Nigeria’s securities and exchange commission, are now required for banks to operate accounts for crypto providers. Banks must set “prudent” transaction limits and not allow cash withdrawals from such accounts.

Crypto executives and analysts have broadly welcomed the reversal. Regulators have not set a timeline for issuing licenses and industry insiders are cautious about how many will be issued.

Sub-Saharan Africa received only 2.3% of the value of global crypto transactions

The restrictions imposed by the central bank during Emefiele’s tenure failed to prevent crypto use. Nigerians used peer-to-peer transaction features offered by local and international trading platforms as workarounds to bypass the ban.

Sub-Saharan Africa received only 2.3% of the value of global crypto transactions between July 2022 and June 2023, according to blockchain analysis firm Chainalysis. But that share was worth $117 billion, most from Nigeria, which Chainalysis ranked second on its global crypto adoption index. Nigeria’s 9% annual growth in crypto transaction volume by mid 2023 was only surpassed by Saudi Arabia and Vietnam.