CEM REPORT, FINANCE| Nigeria’s relationship with cryptocurrency has been a rollercoaster ride. Now, the government is taking another significant step, with the Securities and Exchange Commission (SEC) planning to delist the naira from all peer-to-peer (P2P) crypto platforms. This move aims to tackle alleged manipulation of the local currency, the naira, in the foreign exchange market.
The announcement came from Emomotimi Agama, Director General of the SEC, during a meeting with the Nigerian Blockchain Industry. He emphasized the urgency of delisting the naira as a measure to “save this space” and “avoid the level of manipulation that is currently happening.”
This decision follows a period of heightened scrutiny by Nigerian authorities towards cryptocurrency activity. In April 2024, the Central Bank of Nigeria (CBN) directed fintech companies to warn their customers against crypto transactions and even freeze bank accounts suspected of involvement in crypto through P2P platforms.
This action stemmed from concerns that some crypto users were exploiting the platforms to manipulate the foreign exchange market.
Industry Concerns and Potential Impact
Crypto experts warn that delisting the naira from P2P platforms could have unintended consequences. Chimezie Chuta, founder of the Blockchain Nigeria User Group, anticipates increased pressure on the naira as traders scramble for dollars to facilitate their crypto activities. He also highlights the lack of clarity surrounding the implementation, stating,
“The pressure on the naira will be there. They have not done so yet. There is no formal memo or documentation from any of the regulators or policymakers at this time. I don’t even know the people who will announce whether it’s SEC, CBN, or ONSA,
“There is no formal memo or documentation from any of the regulators or policymakers at this time.”
While the government’s goal is to curb currency manipulation, stakeholders believe the delisting may only be temporary until a regulatory framework for virtual asset providers is established. This raises questions about the long-term direction of crypto regulation in Nigeria.
Nigeria Crypto Story
Nigeria’s crypto story began with a bang in February 2021 when the CBN banned banks and financial institutions from dealing in crypto assets. This move, citing money laundering and terrorism financing concerns, pushed Nigerians towards P2P platforms for their crypto needs.
Fast forward to February 2024, and the government initiated a broader crackdown on crypto platforms. This included targeting Binance, a major cryptocurrency exchange, which ultimately halted naira operations and faced the arrest of two executives visiting Nigeria for discussions.
Authorities believe crypto platforms are fueling currency speculation and contributing to the naira’s devaluation. CBN Governor Olayemi Cardoso claimed that $26 billion flowed through Binance Nigeria in a year from unidentified sources, raising red flags.
If You Ask Me
The planned delisting of the naira from P2P platforms marks another step in Nigeria’s evolving relationship with cryptocurrency. While the government’s goal is to protect the naira and maintain control over its financial system, the move creates uncertainty for the crypto industry in the country.
However, this could also be an opportunity for the government and industry stakeholders to work together in crafting a comprehensive regulatory framework for crypto. This framework could address concerns about financial crime while fostering innovation and allowing Nigerians to participate in the global crypto market.
The coming days and weeks will be crucial as Nigeria navigates this complex issue. As the situation unfolds, crypto enthusiasts in Nigeria and abroad will be watching closely to see how the government balances its need for regulation with the potential benefits of a thriving crypto ecosystem.
