Former President Bola Tinubu’s administration had lifted a previous ban on cryptocurrency transactions before this regulatory shift.
Nigeria is set to ban peer-to-peer (P2P) cryptocurrency trading, citing national security risks, according to a May 3 report from TechCabal. This impending regulation follows a recent announcement by the National Security Adviser (NSA) labeling crypto trading a threat.
The new regulation will directly impact fintech companies that facilitate crypto transactions. Leading Nigerian fintech startups such as Moniepoint, Paga, and Palmpay are already mandated to cease account operations related to cryptocurrency trading.
These companies will also be required to report such transactions to law enforcement authorities.
Tosin Eniolorunda, CEO of Moniepoint, has indicated that this move is a direct result of the NSA’s designation of crypto trading as a national security issue. The status means that a new crypto regulation will be implemented to ban peer-to-peer trading of cryptocurrencies, according to Eniolorunda,
Regulatory Backdrop
The move marks a drastic pivot from the initial liberal stance on cryptocurrencies by the Bola Tinubu administration. Just months ago, in December 2023, the Central Bank of Nigeria lifted a two-year ban on cryptocurrency transactions and initiated discussions with crypto exchanges for potential licensing.
This earlier period of regulatory relaxation now contrasts sharply with the current strict stance, as authorities have recently blamed crypto speculators for contributing to volatility in the foreign exchange regime.
The Central Bank has expressed concerns that crypto traders might be manipulating the naira through speculative P2P trading strategies, often termed “pump-and-dump.”
In a notable development in February 2024, Central Bank Governor Olayemi Cardoso accused the global exchange Binance of facilitating $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.
Extended Impact on Financial Services
The regulatory crackdown extends beyond crypto trading. Recent measures have seen fintechs like Kuda Bank, Moniepoint, OPay, and Palmpay pausing account openings for new customers following directives from the Central Bank.
The action was part of a broader initiative that started two days after the Economic and Financial Crimes Commission (EFCC) blocked 1,146 bank accounts involved in unauthorized forex dealings.
The crypto community has voiced significant concerns over these developments. One community member lamented the government’s disregard for the negative impact of such decisions.
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