Nigeria Bans P2P Crypto to Shield Naira, Targets Exchanges

Key Takeaway

• Nigeria plans to ban person-to-person cryptocurrency trading in the naira, aiming to protect the local currency from further damage.
• The SEC will introduce new regulations for crypto exchanges and digital asset custodians soon, following concerns over P2P trading impacts on the naira's exchange rate.
• This move follows Nigeria's actions against Binance, including a ban and the arrest of executives for alleged financial crimes.

Nigeria Tightens Crypto Regulations

Nigeria has announced a significant move to ban person-to-person (P2P) cryptocurrency trading in the naira, aiming to protect its local currency from further damage. The Securities and Exchange Commission (SEC) Director General, Emomotimi Agama, disclosed this decision during a meeting with fintech professionals, highlighting the government's concern over the industry's impact on the naira's stability. Agama emphasized the necessity of delisting the naira from the P2P space to prevent manipulation, stating, “The thing that needs to be done is delisting the naira from the P2P space in order to avoid the level of manipulation that is currently happening.”

Regulatory Framework on the Horizon

The SEC plans to introduce new regulations for the crypto sector, targeting exchanges, digital asset custodians, and other areas of the industry. These forthcoming rules aim to address the challenges posed by the growing popularity of cryptocurrencies in Nigeria. Agama's announcement underscores the urgency of implementing a regulatory framework to mitigate the perceived threats to the national economy, indicating that these measures will be unveiled “in the coming days.”

Crackdown on Binance

The Nigerian authorities' stance on cryptocurrency trading has led to a crackdown on Binance Holdings Ltd., the world's largest cryptocurrency exchange. Following the ban on Binance and the arrest of two of its executives during their visit to Nigeria in February, the SEC's actions reflect the government's resolve to combat activities deemed harmful to the national interest. One executive, Tigran Gambaryan, is currently detained at the Kuje correctional center in Abuja, facing charges of tax evasion, currency speculation, and money laundering. This incident highlights the government's commitment to addressing manipulations and activities undermining national interest.

National Interest vs. Crypto Adoption

Nigeria's aggressive stance on cryptocurrency trading comes in response to the naira's significant depreciation, which has lost 65% of its value against the dollar since June, when the government relaxed currency rules. With the central bank accusing Binance of facilitating illicit transactions in the naira, the SEC's Director General, Emomotimi Agama, has made it clear that the commission will not hesitate to act against practices threatening national interest. This move reflects the delicate balance Nigeria seeks to maintain between embracing technological and financial innovation and safeguarding its economic sovereignty.

Management Quotes

• Emomotimi Agama, Director General of the Securities and Exchange Commission:

  "The thing that needs to be done is delisting the naira from the P2P space in order to avoid the level of manipulation that is currently happening." "Recent concerns regarding crypto P2P traders and their perceived impact on the exchange rate of the naira has underscored the need for collective action." "Manipulations and all forms of activities that undermine our national interest would not be acceptable." "SEC will not hesitate to utilize all the powers within its mandate to handle issues that are negative and pose a threat to national interest. We ask that those involved in sharp practices that undermine national interest should cease and desist."