Regulation
IMF calls for Nigerian regulation of global cryptocurrency exchanges
THE International Monetary Fund (IMF) has recommended that Nigeria impose registration or licensing requirements on global cryptocurrency trading platforms. This advice follows the IMF’s 2024 Article IV consultation with Nigeria, a detailed analysis aimed at strengthening the country’s financial stability. The latest IMF staff report highlights the urgency of creating a robust regulatory framework for Nigeria’s thriving cryptocurrency market, with the aim of protecting investors and maintaining financial order.
IMF pushes for uniform crypto regulation in Nigeria
The report suggests that cryptocurrency platforms should adhere to the same regulatory requirements as traditional financial intermediaries using the “same business, same risk and same regulation” principle. This measure forms an integral part of the overall strategy to harmonize crypto regulations across the world and curb all types of illegal financial activities. The IMF’s pro-regulation policy is conducted on the assumption that such platforms can influence the manipulation of the value of the local currency in foreign exchange markets.
In February, the CBN Express concerns over the substantial volume of transactions from unidentified sources passing through cryptocurrency exchange platforms. Specifically, the bank noticed Binance Nigeria It had processed $26 billion worth of transactions from unidentified sources over the past year, leading to regulatory scrutiny and subsequent lawsuits against its executives. These ongoing challenges highlight the urgent need for effective regulatory measures to address the risks associated with the rapid growth of cryptocurrency trading platforms.
In response to the CBN’s concern over the huge number of transactions from unidentified sources passing through cryptocurrency exchange platforms in February, one of the bank’s specifications was that Binance Nigeria had processed transactions amounting to $26 billion from sources not identified in the last year. They are currently under regulatory scrutiny and resulting legal action against their executives. The problems that continually arise point to the need for efficient supervisory arrangements to minimize the negative effects of the surge in trading on cryptocurrency platforms.
SEC Revises Cryptocurrency Regulations and Opens Doors to Banks
Faced with the complexities of cryptocurrency regulation, the Nigerian administration has taken great measures to address issues such as cryptocurrency trading. In May 2022, the commission issued new regulations related to the issuance, platforms, and custody of digital assets, according to the SEC. The regulations, which include a capital adequacy of N500 million for cryptocurrency exchanges requiring a virtual asset service provider license, have seen a huge drift towards regulation instead of an outright ban.
In December 2023, the SEC gave a new perspective by lifting the ban on banks from handling crypto transactions, which involve stringent regulations Know your customer (KYC) and anti-money laundering (AML) controls. This was part of a larger scheme to integrate cryptocurrency into the country’s traditional financial markets while mitigating associated risks.
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