Nigeria Launches Pilot Program for Virtual Asset Service Providers

The Central Bank of Nigeria (CBN) has initiated a pilot program to oversee Virtual Asset Service Providers (VASPs), selecting six entities to participate in the trial. KuCoin stands out as the only international exchange among the selected VASPs, alongside five Nigerian payment and crypto players.

The CBN aims to test the participating VASPs' compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations, framed against the Financial Action Task Force's Recommendations 15 and 16. The pilot program is designed to assess how these entities perform under direct central bank oversight.

Under the arrangements, participating firms must engage in regular regulatory communications with the CBN and other agencies, submit periodic data on AML/CFT/CPF performance, and undergo audits of customer onboarding and KYC processes. The pilot program is expected to run for six to nine months, after which it will help determine whether these entities meet the necessary standards for full FATF-aligned compliance.

The selection of KuCoin and other VASPs in this first cohort suggests that the CBN sees them as key players in Nigeria's crypto market. If successful, the pilot program may pave the way for large global platforms to operate under domestic oversight, rather than being pushed out of key markets due to regulatory pressures.