CBN VASP Regulations 2024: What Nigerian Crypto Exchanges Must Do

What Changed: The CBN Policy Reversal

After the 2021 blanket prohibition on cryptocurrency transactions, the CBN reversed course in December 2023, a landmark shift driven by FATF pressure, growing P2P volumes beyond regulatory reach, and Nigeria's need to formalise the $400M+ annual crypto market.

Under the new framework, banks and Other Financial Institutions (OFIs) may now open and maintain accounts for Virtual Asset Service Providers, provided those VASPs are licensed by the Securities and Exchange Commission (SEC) Nigeria.

SEC Nigeria's Digital Asset Exchange (DAX) Licensing Requirements

The SEC Nigeria's 2024 Rules on Issuance, Offering Platforms, and Custody of Digital Assets mandate that all Digital Asset Exchanges operating in Nigeria must:

• Register as a Digital Asset Exchange (DAX) with the SEC
• Maintain minimum paid-up capital of ₦500 million
• Implement a robust AML/CFT programme aligned with FATF recommendations
• Conduct KYC on all customers including BVN and NIN verification
• File Suspicious Transaction Reports (STRs) with the NFIU
• Comply with the FATF Travel Rule for transactions above $1,000 equivalent
• Maintain transaction records for a minimum of 5 years
• Appoint a designated Compliance Officer

What Banks Must Do When Serving VASPs

Financial institutions that choose to serve VASPs take on significant compliance obligations. The CBN expects banks to apply Enhanced Due Diligence (EDD) to all VASP relationships, treating them as high-risk customers by default.

This includes ongoing monitoring of transaction flows from VASP accounts, periodic reassessment of the VASP's own AML controls, and immediate reporting of any suspicious activity patterns.

The FATF Travel Rule: Nigeria's Obligations

As a FATF member, Nigeria is obligated to implement the Travel Rule for virtual assets. This requires VASPs to collect and transmit originator and beneficiary information for transactions above the $1,000 USD equivalent threshold.

Required information includes full name, account number or wallet address, and where technically feasible, physical address or national identity number of both sending and receiving parties.

How AI Shield Nexus Supports VASP Compliance

AI Shield Nexus provides Nigerian financial institutions and VASPs with a unified compliance platform that covers every regulatory obligation in the CBN/SEC framework:

• Automated BVN/NIN KYC verification for crypto wallet onboarding
• Wallet address risk scoring with blockchain analytics integration
• FATF Travel Rule data capture and transmission workflows
• Real-time STR generation for NFIU submission
• Enhanced Due Diligence workflows for VASP onboarding
• Transaction velocity monitoring with NGN equivalent thresholds

Conclusion

The formalisation of the crypto sector in Nigeria is both an opportunity and a compliance imperative. Institutions that move quickly to build robust VASP compliance infrastructure will capture the market; those that delay risk regulatory censure. AI Shield Nexus is built to make this transition seamless.