The Securities and Exchange Commission, acting on behalf of the Federal Government, is poised to remove the naira from all peer-to-peer crypto platforms. This move comes as part of the government’s intensified measures to combat exchange rate manipulation and illicit dollar trading.
This development arises amidst recent efforts by the Federal Government to oversee Nigeria’s crypto market, valued at approximately $57 billion. Emomotimi Agama, the newly appointed Director-General of the Commission, unveiled the government’s latest initiative during a gathering with representatives from the Nigerian blockchain sector on Monday. The meeting was orchestrated by the Blockchain Industry Coordinating Committee of Nigeria.
Agama confirmed that the government was currently drafting a new set of regulations to govern the crypto sector.
Operators in the crypto space have allegedly used the P2P platforms to manipulate the naira and the exchange rate.
“That is one of the things that must be done to save this space; the delisting of the naira from the P2P platforms to avoid the level of manipulation that is currently happening. I want your cooperation in dealing with this as we roll out regulations in the coming days,” the SEC DG told the members of the local crypto community.
Agama’s announcement came barely a week after the Central Bank of Nigeria instructed payment service banks to caution their customers against engaging in crypto transactions.
Its already known that some local exchanges in the country, such as OKX, Bitbarter and some platforms under the membership of Stakeholders in the Blockchain Technology Association of Nigeria had already stopped naira services in solidarity with the government.
However, the SEC DG urged members of the crypto community in Nigeria to “name and shame” the players involved in the manipulation of the naira.
He maintained that some bad players in the industry were manipulating the national currency, an act that the government was determined to deal with.
Agama said, “We ask with all sense of sincerity that those involved in sharp practices cease. We encourage you to reach out to us by naming and shaming those involved.
“This nation has a future, and this future is dependent on this community. For us at the SEC, our interest is to provide an enabling environment for fintech to thrive, and by so doing; we expect the fintech community to reciprocate by doing the right thing.
“Patriotism can never be wished away. Whatever we do that would bring dishonor to our country, we must try to avoid it. What is very critical and has brought about this meeting are the concerns regarding crypto P2P traders and their effect on the naira.”
He maintained that the SEC under his watch was poised for an innovative digital asset regulatory regime that would sustain Nigeria as Africa’s digital asset powerhouse with diverse solutions like real-world asset tokenization.
This, according to him, will drive wealth and catalyse the country’s capital market.
He said, “We must explore innovative solutions to this problem and strike the right balance between encouraging innovation and safeguarding our national economic interests. This we will do in a friendly and firm manner to enable us to achieve the desired result.
“On that note, I want to emphasize that we are working on different fronts to sustain decent practices within our market. However, we are here to meet ourselves to know those playing within the sector decently and are open to hearing your suggestions on how we can effectively manage all obscure cryptocurrency trading activities within our jurisdiction, P2P inclusive, irrespective of the challenge we all know that P2P trading poses.”
The Chairman of the Fintech Association of Nigeria, Dr. Babatunde Obrimah, in his remark commended the SEC DG for the bold steps and the proposed partnership with the ecosystem.
He pledged the association’s commitment to working with the DG to sanitise the virtual ecosystem.
On its part, BICCoN requested the setting up of a working group to tackle the various challenges facing the crypto space and move the market forward.
The co-founder of a local exchange, Bitbarter.io, Chukwuemeka Ezike, told The PUNCH that operators within the ecosystem were willing to support and work with the government to ensure that some of the issues relating to the naira’s value were resolved.
While acknowledging that huge investments have been put into building their platforms, he said it would be imperative to work out possible resolutions to enhance the sector’s growth.
On Saturday, the Chairman of BICCoN, Lucky Uwakwe, had said that the group would be seeking to reach a middle ground with the regulator.
Ukakwe said the meeting “is for us to try and bring the industry to be compliant and remove bad actors who abuse technology, especially the concern raised by the government. This has to do with those who use the technology to manipulate the naira.
“We also hope that innovation is encouraged to enable the industry to gain more foreign inflow that will aid the current administration’s drive for foreign investment into the nation, as seen in other countries such as China and the UAE, and not to stifle the industry.”
Last week, the CBN stopped major fintech firms from onboarding new customers in an ongoing audit of their Know-Your-Customer process.
The ‘Know Your Customer’ compliance level of fintechs has also been a source of worry for regulators. This involves verifying a customer’s identity and understanding their financial activity to prevent financial crimes, such as money laundering, terrorist financing, and fraud.
According to the Nigeria Inter-Bank Settlement System’s fraud watch report, fraud losses increased by 496.96 per cent over the past five years, and financial institution customers lost ₦59.33bn between 2019 and 2023.
Following the regulatory action, major fintech firms, including Opay and PalmPay, sent emails to their customers on Friday, warning them against trading in cryptocurrency or any virtual currency on their apps. They also threatened to block any accounts found engaging in such activities.
Already, the Economic and Financial Crimes Commission has obtained a court order to freeze at least 1,146 bank accounts owned by various individuals and companies allegedly involved in illegal foreign exchange transactions.
Justice Emeka Nwite, in a ruling on the ex-parte motion, moved by counsel for the anti-graft agency, Ekele Iheanacho, also granted the commission’s application to conclude the investigation within 90 days.
Part of the court document read, “That the applicant’s (EFCC) application is hereby granted as prayed.
“That an order of this honourable court is hereby made freezing the bank accounts stated in the schedule below, which accounts are owned by various individuals who are currently being investigated in a case involving the offences of unauthorised dealing in foreign exchange, money laundering, and terrorism financing, to the extent that the investigation will be for a period of 90 (ninety) days.”
The President of the Bank Customers Association of Nigeria, Uju Ogubunka, backed the CBN’s move to suspend new account openings on the affected platforms.
He said that the strict regulations that govern deposit money banks must apply to FinTech’s and microfinance banks to ensure the integrity of the financial institutions.
He said, “Anything that can disrupt the system should not be permitted. If the platforms are being used for things that are against the regulations, I think the CBN decision is OK. I don’t see anything wrong with that. It behoves the companies now to get their KYC right.
In 2021, the CBN restricted banks and other financial institutions from operating accounts for cryptocurrency service providers.
However, in December 2023, the financial regulator lifted the ban.
But fresh concerns emerged in February over the activities of the largest cryptocurrency exchange in the world, Binance, on its peer-to-peer platform, especially on issues relating to its price cap on USDT trading.
Authorities said those activities contributed to the depreciation of the naira.
On March 8, Binance stopped its naira services after two of its executives were detained by the Nigerian authorities
A presidential spokesman, Bayo Onanuga, said Binance could destroy the Nigerian economy by arbitrarily fixing the foreign exchange, rate if not stopped.
While confirming that the government has taken strict action against the website, Onanuga said, “If we don’t clamp down on Binance, Binance will destroy the economy of this country. They just fix the rate.”
“We have saboteurs. Look at what Binance is doing to our economy. That is why the government moved against Binance. Some people sit down using cyberspace to dictate even our exchange rate, hijacking the role of the CBN.
“They just sit down and fix anything they like. It’s sabotage, and we are trying to prevent that from happening henceforth.”
