Princewill Pius
In a significant regulatory shift, Nigeria is poised to ban peer-to-peer (P2P) cryptocurrency trading, citing national security concerns. This move follows the National Security Adviser’s (NSA) classification of crypto trading as a national security issue, prompting fintech startups to take drastic measures.
Moniepoint, Opay, and Kuda, among others, will block accounts involved in cryptocurrency transactions and report them to law enforcement. This decision comes after the NSA ordered a pause in new customer signups, citing concerns over the rapid onboarding process and potential links to crypto trading.
The impending Crypto P2P Trading Ban in Nigeria marks a reversal of the initial softening of stance on crypto by the Bola Tinubu administration. In December 2023, the Central Bank lifted a two-year ban on cryptocurrency transactions, and crypto exchanges were in talks with the Securities and Exchange Commission (SEC) for a crypto license.
However, authorities have since blamed crypto speculators for the volatile foreign exchange regime, leading to a crackdown on P2P trading. The Central Bank believes that crypto traders use P2P trading to manipulate the naira via pump-and-dump strategies. In February 2024, the Central Bank Governor claimed that $26 billion in untraceable transactions were processed by Binance, resulting in a freeze on over 1,000 bank accounts involved in P2P transactions.
The relaxed rules for financial inclusion have come under scrutiny, with traditional banks claiming that easily opened accounts are conduits for fraudulent activities. In response, the Central Bank amended the rules in December 2023, requiring fintech startups to request identification for all account classes by March 2024.
As Nigeria tightens its grip on crypto, the implications for the fintech industry and cryptocurrency traders remain uncertain. The ban on P2P trading, if implemented, will significantly impact the crypto landscape in Nigeria, and industry players are bracing for the fallout.