Following the Central Bank of Nigeria’s reversal of the cryptocurrency transaction ban for banks, Yellow Card Exchange, a Pan-African crypto trading platform, is actively seeking licensing in the nation.
Yellow Card to expand operations in Nigeria
Yellow Card Exchange, driven by its mission to dominate the African market, is actively exploring strategies to capitalize on the first-mover advantage through the pursuit of licensing. While being a key player in Africa, delivering experiences akin to Jack Dorsey’s Cash App, Yellow Card has faced limitations in Nigeria due to regulatory uncertainties.
This scenario is set to shift, as affirmed by Ogochukwu Umeokafor, the exchange’s Director of Product Management. In a phone interview with Bloomberg, Ogochukwu stated:
“You’ve waited for something and it has come true, and we’ll jump on it immediately. We want a regulated environment because it’ll help the business move; it will help people have more confidence in doing business with us.”
Ogochukwu Umeokafor, Director of Product at Yellow Card
Yellow Card Exchange has initiated the approval process with the Nigerian Securities and Exchange Commission (SEC). However, progress has reportedly been hindered as the company needed a functional corporate account, which was previously impossible under the CBN rule.
With the ban lifted, Nigerian commercial banks are now permitted to open accounts for Virtual Assets Service Providers (VASPs). Crypto traders can also operate without the fear of asset seizure, as was the norm before. Beyond Yellow Card Exchange, other trading platforms may enter the Nigerian market, capitalizing on the crypto-savvy population.
Nigeria’s financial landscape
The Central Bank of Nigeria (CBN) has become the first apex bank in Africa to introduce a Central Bank Digital Currency (CBDC) called the e-Naira. The general acceptance of Bitcoin among the population has led to the involvement of various humanitarian projects in the West African country.
Launched in October 2021, Nigeria’s e-Naira serves as the country’s central bank digital currency (CBDC). Unlike a distinct digital currency, it represents a digital version of the national currency, pegged at parity to the fiat naira. The e-Naira is subject to stringent access controls by the central bank, and while it isn’t a financial asset on its own, it functions as a digital form of the national currency.
The primary goals of the e=Naira include enhancing financial inclusion, reducing remittance transfer costs, and minimizing informality in the economy.
However, as of October 2022, its usage within the country has been limited. In response, the Nigerian government is seeking assistance to redesign and promote the e-Naira. Recognizing its potential in fostering financial inclusion, there’s a need for a strategic approach to define its relationship with traditional currency, considering whether it complements or substitutes it.
To encourage greater use of the CBDC, the Central Bank of Nigeria is adjusting the e-Naira model.
In Feb. 2021, the Central Bank of Nigeria (CBN) imposed a ban on cryptocurrency transactions, citing worries about money laundering and terrorism financing. Nevertheless, on Dec. 22, 2023, the CBN lifted the ban and issued fresh guidelines for financial institutions to oversee crypto transactions.
These guidelines set forth minimum standards for establishing banking relationships with virtual assets service providers (VASPs), including crypto exchanges.
The CBN’s updated guidelines emphasized rigorous customer KYC and anti-money laundering checks. Despite the lift on the ban, banks are still prohibited from holding, trading, and transacting in virtual currencies.
The CBN’s decision 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. This move has garnered support from the local blockchain industry, urging the Nigerian federal government to implement comprehensive and amenable regulations.