Regulation
Nigeria to ban P2P crypto trading: report
Former President Bola Tinubu’s administration had lifted a previous ban on cryptocurrency transactions before this regulatory change.
Nigeria is set to ban peer-to-peer (P2P) cryptocurrency trading, citing national security risks, according to a report. TechCabal May 3 Report. This impending regulation follows a recent announcement by the National Security Advisor (NSA) calling crypto trading a threat.
The new regulations will directly impact fintech companies that facilitate crypto transactions. Leading Nigerian fintech startups such as Moniepoint, Paga and Palmpay are already required to cease account operations related to cryptocurrency trading.
These companies will also be required to report these transactions to law enforcement authorities.
Tosin Eniolorunda, CEO of Moniepoint, indicated that this decision is a direct result of the NSA designating crypto trading as a matter of national security. This status means that new crypto regulations will be implemented to ban peer-to-peer trading of cryptocurrencies, according to Eniolorunda,
Regulatory context
The move marks a radical departure from the Bola Tinubu administration’s initial liberal stance on cryptocurrencies. Just a few months ago, in December 2023, the Central Bank of Nigeria survey a two-year ban on cryptocurrency transactions and has started discussions with cryptocurrency exchanges for a potential license.
This earlier period of regulatory relaxation now stands in stark contrast to the current strict stance, with authorities recently accusing cryptocurrency speculators of contributing to volatility in the exchange rate regime.
The Central Bank has expressed concerns that crypto traders could manipulate the naira through speculative P2P trading strategies, often referred to as pump-and-dump.
In a notable development in February 2024, the Central Bank Governor, Olayemi Cardoso accused global exchange Binance to facilitate $26 billion in untraceable transactions. This accusation led to significant regulatory actions, including a crackdown on Binance and the freezing of over 1,000 bank accounts associated with P2P crypto transactions.
Widespread impact on financial services
The regulatory crackdown extends beyond crypto trading. Recent measures have seen fintechs like Kuda Bank, Moniepoint, OPay and Palmpay suspend the opening of accounts for new customers in line with Central Bank guidelines.
The action was part of a broader initiative launched two days after the Economic and Financial Crimes Commission (EFCC) blocked 1,146 bank accounts involved in unauthorized foreign exchange transactions.
The crypto community has expressed serious concerns over these developments. A community member lamented the government’s disregard for the negative impact of such decisions.
Source: Linkedin