Pan-African cryptocurrency exchange Yellow Card Financial plans to apply for a Virtual Asset Service Provider (VASP) license in Nigeria following the recent lifting of the country’s cryptocurrency ban.
Nigeria’s central bank imposed a blanket ban on cryptocurrency activities in February 2021, preventing banks and financial institutions from facilitating crypto-related transactions. The ban created operational hurdles for cryptocurrency businesses in the country.
However, the recent reversal of the ban now allows Yellow Card to legitimize its operations and expand its cryptocurrency services through licensing.
Growing Crytocurrency Adoption
Nigeria has one of the highest cryptocurrency adoption and ownership rates in the world, with 99% crypto awareness and 70% understanding of blockchain technology, according to surveys. Many Nigerians use cryptocurrency as a hedge against inflation and currency devaluation.
Importance of Regulated Operations
Yellow Card’s Director of Product Management, Ogochukwu Umeokafor, stressed the importance of operating in a regulated environment to build confidence with customers and partners.
Yellow Card currently offers limited cryptocurrency services in Nigeria, including buying/selling Bitcoin and Tether’s USDT stablecoin. The company intends to expand services and attract institutional investors through licensing.
Yellow Card is in discussions with Nigeria’s Securities and Exchange Commission (SEC), which has invited applications from crypto exchanges seeking to operate legally.
Prior to the ban lift, Yellow Card was unable to open a bank account needed for VASP licensing. However, the Central Bank of Nigeria recently directed banks to open accounts for crypto companies.
The Way Forward
The initial blanket crypto ban aimed to curb money laundering and illicit financing. However, it led to operational challenges for crypto businesses like Yellow Card.
Going forward, a regulated cryptocurrency industry could help Nigeria harness the potential of crypto for economic development, while mitigating the associated risks through effective compliance.
Yellow Card seeking a VASP license in Nigeria reflects the country’s growing cryptocurrency sector and the benefits of operating within a transparent regulatory framework.