Nigerians in shock as CBN, FG crack down on crypto market

A growing number of Nigerian residents are expressing concerns following the crackdown on crypto assets via the financial sector.

Following the classification of cryptocurrency trading as a national security concern by Nigeria’s National Security Advisor (NSA), at least four fintech startups operating in the country – Opay, Moniepoint, Paga and Palmpay – will block customer accounts carrying out transactions in cryptocurrencies and reporting these transactions to law enforcement.

Nigerian fintechs are closing up shop on the crypto industry

The Central Bank of Nigeria (CBN) last week banned major fintech companies, including Kuda, Opay, PalmPay and Moniepoint, from accepting new customers.

The action of the umbrella bank was linked to an ongoing evaluation of the Know-Your-Customer procedures of fintech companies. These companies have been under investigation in recent months due to concerns about money laundering and terrorist financing.

Africa’s most populous country comes second in terms of interest in Bitcoin globally, even though the FG had banned banks from providing services to cryptocurrency customers. The African country, which has long struggled with high inflation, has held the crypto sector party responsible for the recent depreciation of the naira.

As a result, the Economic and Financial Crimes Commission (EFCC) obtained a court order to freeze at least 1,146 bank accounts belonging to different individuals and companies allegedly involved in illicit foreign exchange operations.

OPay warned in a notification on Friday that it would impose severe penalties on users who disobey its policies, which are in line with the CBN’s stance on cryptocurrency trading.

• “Please note that OPay prohibits the trading of any virtual currency, including cryptocurrencies, in line with instructions issued by the CBN. Any accounts engaging in this type of activity will be closed and regulatory authorities will have access to customer information. the financial technology company said.

This appears to be at odds with the CBN’s previous position. In a circular issued late last year, it had previously asked financial institutions to assist in opening accounts, offer certain settlement services and serve as intermediaries for companies carrying out transactions on cryptocurrency assets.

Mixed signals

A two-year restriction on crypto transactions was lifted by the CBN last year, and discussions regarding cryptocurrency licensing were ongoing between the Securities and Exchange Commission (SEC) and at least three cryptocurrency exchanges.

CBN had previously refuted a report claiming that it had issued an order requiring all banks and financial institutions to identify individuals or organizations transacting with cryptocurrency exchanges and ensure that such accounts are placed on instructions “ Post No Debit,” which are orders from banks or other financial institutions to limit specific transactions on a customer’s account, for six months.

Market leaders view the move as counterproductive as most P2P transactions take place through opaque channels. Most P2P transactions, according to Ray Youssef, CEO of NoOnes, take place on WhatsApp, Telegram, cafes and public spaces rather than on Binance or any other platform.

• “On Binance P2P, NoOnes, or any of these other platforms, the majority of peer-to-peer activity does not take place. They take place in cafes, on the street, on Telegram and WhatsApp and everywhere else.
• “Most peer-to-peer communications take place there. And 60 billion dollars, if I can estimate it, passing through centralized exchanges. Because Nigerians are so resourceful and can find uses for things that are not necessarily intended for them, I believe the majority of this is peer-to-peer volume that they also sort of hide,” a- he continued.

The FG had previously accused Binance of encouraging currency speculation which had caused the value of the naira to plummet. He then invited two Binance executives to the country, after which they were arrested and one of them managed to escape.

Nigeria has Africa’s largest cryptocurrency economy in terms of trading volume, and many of its residents use cryptocurrency assets amid its very young and vibrant population.

However, the new SEC Director General has sparked optimism and confidence in Nigeria’s blockchain community. The pro-crypto history of the new SEC chair is seen as an added benefit for the regional crypto sector.

Emomotimi Agama, former Managing Director of the Nigerian Capital Market Institute (NCMI), has been appointed by Nigerian President Bola Tinubu as the new Chairman of the SEC.