Regulation
IMF calls for Nigerian regulation of global cryptocurrency exchanges
THE International Monetary Fund (IMF) has recommended that Nigeria impose registration or licensing requirements on global cryptocurrency trading platforms. This advice follows the IMF’s Article IV Consultations with Nigeria in 2024, a detailed analysis aimed at strengthening the country’s financial stability. The latest IMF staff report highlights the urgency of creating a robust regulatory framework for Nigeria’s booming cryptocurrency market, aimed at protecting investors and maintaining financial order.
IMF pushes for uniform crypto regulation in Nigeria
The report suggests that cryptocurrency platforms should adhere to the same regulatory requirements as traditional financial intermediaries using the “same business, same risk and same regulation” principle. This measure is an integral part of the overall strategy to harmonize crypto regulations globally and curb all kinds of illegal financial activities. The IMF’s regulatory policy is carried out against the backdrop of assumptions that these platforms could influence the manipulation of the value of the local currency in foreign exchange markets.
In February, the CBN expressed Concerns about the large volume of transactions from unidentified sources passing through crypto exchange platforms. More specifically, the bank emphasized that Binance Nigeria had processed transactions worth $26 billion from unidentified sources over the last year, leading to regulatory scrutiny and subsequent legal action against its executives. These continuing challenges highlight the urgent need for effective regulatory measures to address the risks associated with the rapid growth of cryptocurrency exchanges.
In response to the CBN’s concerns over the massive number of transactions from unidentified sources flowing through cryptocurrency exchanges in February, one of the bank’s specifications was that Binance Nigeria had processed transactions from an amount of $26 billion from unidentified sources over the past year. They are currently subject to regulatory scrutiny and subsequent legal action against their executives. The continually emerging issues highlight the need for effective monitoring measures to minimize the negative effects of the boom in trading on cryptocurrency platforms.
SEC Revises Crypto Regulations, Opens Doors to Banks
Faced with the complexity of cryptocurrency regulation, the Nigerian administration has taken significant steps to address issues such as cryptocurrency trading. In May 2022, according to the SEC, the commission issued new regulations related to the issuance, platforms and custody of digital assets. The regulations, which include sufficient capital of N500 million for crypto exchanges seeking a virtual asset service provider license, have undergone a monumental drift towards regulation rather than an outright ban.
In December 2023, the SEC gave a new perspective by lifting the ban on banks from handling crypto transactions, which are subject to strict rules. Know your customer (KYC) and anti-money laundering (AML). This was part of a broader program to integrate cryptocurrency into the country’s traditional financial markets by mitigating associated risks.
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