The Federal Government is considering the suspension of Nigeria’s $56.7 billion peer-to-peer cryptocurrency market following a crucial meeting between the Securities and Exchange Commission (SEC) and digital asset operators scheduled for Monday.
This move comes amidst growing concerns over illicit activities and the manipulation of the naira exchange rate within the cryptocurrency space.
According to Chainalysis, a United States-based international blockchain analysis firm, Nigeria’s volume of crypto transactions surged by nine percent year-over-year to $56.7 billion between July 2022 and June 2023. The SEC’s initiative signals a broader effort by the Federal Government to tighten regulatory oversight in response to the rapid growth of the crypto market.
Earlier this week, the Central Bank of Nigeria (CBN) halted major fintech firms from onboarding new customers as part of an ongoing audit of their Know-Your-Customer process. Subsequently, fintech giants like Opay and PalmPay warned customers against trading in cryptocurrency or any virtual currency on their platforms, threatening to block accounts found engaging in such activities.
The proposed suspension of peer-to-peer crypto trading is expected to enable the government to formulate comprehensive regulations for the industry. While some sources suggest the possibility of engaging crypto stakeholders to develop new rules, others speculate on a temporary halt in P2P crypto trading.
Despite concerns raised by the threat of account blocking, especially among the 33.4 million individuals actively trading cryptocurrencies, the government appears focused on addressing regulatory gaps within the fintech ecosystem. The meeting, facilitated by the Blockchain Industry Coordinating Committee of Nigeria, aims to deliberate on the current developments in the crypto space.
While uncertainties loom regarding the exact outcome of the meeting, industry players are hopeful for constructive engagement with regulators. Lucky Uwakwe, Chairman of BICCoN, expressed the group’s intention to seek a middle ground with regulators to foster compliance and innovation within the industry.
However, concerns over regulatory burdens persist, particularly with the proposed 400 percent increase in crypto firm registration fees. Despite recent amendments to the SEC’s guidelines, doubts remain about the feasibility of stringent regulations in a rapidly evolving tech landscape.