After the Central Bank of Nigeria lifted the ban on cryptocurrency transactions for banks, Yellow Card Exchange, a Pan-African crypto trading platform, is actively pursuing licensing in the country.
Yellow Card Plans to Broaden its Operations in Nigeria
Yellow Card Exchange, with a mission to lead the African market, is actively strategizing to leverage the first-mover advantage by seeking licensing. Despite being a significant player in Africa, providing experiences comparable to Jack Dorsey’s Cash App, Yellow Card has encountered constraints in Nigeria due to regulatory uncertainties.
This landscape is poised to change, as confirmed by Ogochukwu Umeokafor, the exchange’s Director of Product Management, in a phone interview with Bloomberg.
Yellow Card Exchange has commenced the approval process with the Nigerian Securities and Exchange Commission (SEC). However, progress has faced obstacles due to the necessity for a functional corporate account, a capability previously prohibited by the CBN rule.
With the ban lifted, Nigerian commercial banks can now open accounts for Virtual Assets Service Providers (VASPs). This means crypto traders can operate without the previous fear of asset seizure. Beyond Yellow Card Exchange, other trading platforms may enter the Nigerian market, taking advantage of the crypto-savvy population.
The Nigeria’s Financial Terrain
The Central Bank of Nigeria (CBN) stands as Africa’s pioneering apex bank to introduce a Central Bank Digital Currency (CBDC), known as the e-Naira. Bitcoin’s widespread acceptance in the population has spurred involvement in various humanitarian projects in the West African country.
Launched in October 2021, Nigeria’s e-Naira serves as the CBDC, representing a digital version of the national currency, pegged at parity to the fiat naira. Subject to stringent access controls by the central bank, it functions as a digital form of the national currency, with primary goals including enhancing financial inclusion, reducing remittance transfer costs, and minimizing informality in the economy.
As of October 2022, its usage within the country has been limited, prompting the Nigerian government to seek assistance in redesigning and promoting the e-Naira. Recognizing its potential in fostering financial inclusion, a strategic approach is needed to define its relationship with traditional currency.
To encourage greater use of the CBDC, the Central Bank of Nigeria is adjusting the e-Naira model. In February 2021, the CBN imposed a ban on cryptocurrency transactions, citing concerns about money laundering and terrorism financing. However, on December 22, 2023, the CBN lifted the ban, issuing fresh guidelines for financial institutions to oversee crypto transactions.
These guidelines establish minimum standards for banking relationships with Virtual Assets Service Providers (VASPs), including crypto exchanges. Despite the ban lift, banks are still prohibited from holding, trading, and transacting in virtual currencies. This aligns with a broader strategy to regulate the crypto industry in Nigeria, aiming to restore the country’s position as a significant hub for crypto trading in Africa. The move has gained support from the local blockchain industry, urging the Nigerian federal government to implement comprehensive and amenable regulations.
