Regulation
KuCoin is the latest to exit Nigeria’s P2P crypto market amid regulatory scrutiny
Nigeria’s naira continues its downward spiral despite the tightening noose around cryptocurrency trading. The government, blaming digital assets for the currency’s problems, has launched a multi-pronged attack on the digital asset, forcing major exchanges to retreat and pushing traders into riskier avenues.
The Central Bank points the finger at cryptocurrencies
The Central Bank of Nigeria (CBN) has identified cryptocurrency as the villain in the naira devaluation drama. Officials allege rampant manipulation of the currency’s value through pump-and-dump schemes peer-to-peer (P2P) platforms.. This, they argue, undermines their efforts to stabilize the naira through monetary policy.
You exchange feeling the heat
The finger pointing has had a chilling effect on digital currency assets. Fearing regulatory retaliation or an outright ban, major exchanges like Binance, OKX, and more recently KuCointhey have all suspended Naira support on their P2P platforms.
KuCoin, in an announcement on Wednesday, downplayed the move as a “temporary pause” to ensure compliance with local regulations. However, the lack of a clear timeline for recovery leaves Nigerian bitcoin traders in limbo.
The impending P2P ban pushes traders into the shadows
The situation is likely to get worse as Nigeria’s Securities and Exchange Commission (SEC) plans a complete ban on P2P cryptocurrency trading. This move, if implemented, will effectively push crypto transactions into the shadow of encrypted messaging apps.
Experts warn that this change will expose merchants to a Wild West environment full of scams, exploitation rates and a complete lack of consumer protection.
Central Bank Freezes Transactions, EFCC Targets Traders
The CBN does not just regulate trade. Over the past two weeks they have instructed financial institutions to freeze and report all cryptocurrency transactions. This move effectively cuts off any legal avenue for Nigerians to buy or sell cryptocurrencies using their naira.
Adding fuel to the fire, the Economic and Financial Crimes Commission (EFCC), Nigeria’s anti-corruption agency, has frozen over 1,000 cryptocurrency trader accounts in the past three weeks. These accounts are reportedly under investigation for money laundering and terrorist financing, charges that many find dubious given the transparency inherent in blockchain technology.
The effectiveness of the crackdown questioned
Despite aggressive measures, the naira continues its downward trajectory. Currently, it is trading at a dismal 1,520 naira per US dollar. This suggests that the crackdown on cryptocurrencies may be a misguided attempt to address a complex economic issue with a technological scapegoat.
The lack of clarity frustrates businesses
The Nigerian government’s approach has also been criticized for its lack of transparency. Binance CEO Richard Teng shared his frustrations in a recent blog post, highlighting their year-long efforts to obtain licensing information from the Nigerian SEC, all in vain.
This lack of a clear regulatory framework makes it impossible for legitimate crypto companies to operate, pushing the industry further underground.
Featured image from Getty Imageschart from TradingView