Blockchain
Nigeria is set to ban P2P cryptocurrency trading due to national security concerns
Nigeria’s National Security Advisor (NSA) is poised to label cryptocurrency trading a national security threat, signaling an imminent crackdown on peer-to-peer crypto transactions, according to local media reports and CryptoSlate sources. peers (P2P).
The move follows the decision of at least three major Nigerian fintech startups – Moniepoint, Paga and Palmpay – to block accounts involved in cryptocurrency transactions and report such activities to law enforcement.
According to Moniepoint CEO Tosin Eniolorunda, the NSA classification is expected to pave the way for new regulations banning P2P cryptocurrency trading, with an official announcement expected soon.
This represents a notable shift in regulatory attitude, particularly after the Bola Tinubu administration had previously displayed a more lenient attitude towards cryptocurrencies. Indeed, in December 2023, the Central Bank of Nigeria lifted its two-year ban on crypto transactions, suggesting a more welcoming regulatory environment.
However, in recent months we have witnessed trend reversal, with authorities blaming crypto speculators for exacerbating volatility in the foreign exchange (FX) market. The proposed ban on P2P trading is based on the Central Bank’s claim that cryptocurrency traders exploit this method to manipulate the Nigerian naira through pump-and-dump schemes.
Central Bank Governor Olayemi Cardoso claimed in February 2024 that Binance had facilitated $26 billion in untraceable transactions, leading to a crackdown on the exchange and the freezing of more than 1,000 bank accounts linked to P2P transactions.
In a related development, four major fintech firms were recently forced to block the opening of new customer accounts, although the source of this directive remains unclear.
Moniepoint CEO Tosin Eniolorunda confirmed that the move was at the behest of the NSA, which expressed concern about the ease with which fintech platforms facilitate the opening of accounts, particularly Tier 3 accounts.
While an NSA spokesperson declined to provide further details, this development highlights growing scrutiny over the rapid proliferation of accounts facilitated by fintech startups. Traditional banks have long feared that such accounts serve as conduits for illicit funds.
In response to these concerns, the Central Bank changed its rules in December 2023, instructing fintech startups to verify the identity of all account holders by March 2024.
As Nigeria prepares to adopt further regulatory measures in the cryptocurrency sector, the fate of P2P trading remains uncertain amid growing national security concerns and the evolving regulatory landscape.