According to the IMF, imposing mandatory registration and license procurement for every crypto platform before obtaining operational access in Nigeria will be crucial in helping the West African nation secure financial stability.

Read Also: Nigerian SEC Seeks Stricter Crypto Regulation, Deletes P2P On Platforms

The report read in part, “Authorities should ensure the application of AML/CFT [Anti-Money Laundering and Countering the Financing of Terrorism] controls by crypto trading platforms and other virtual asset service providers through effective AML/CFT risk-based supervision.“

The financial agency highlighted the new recommendations in IMF’s 2024 Article IV consultation with Nigeria, and it came at a period characterized by Nigerian currency gross devaluation.

Aside from suggesting possible methods of enacting crypto regulatory compliance, the IMF also commended the Nigerian regulatory bodies’ handling of crypto-related cases, evident in the ongoing legal dispute between the Nigerian government and the world’s largest exchange, Binance.

Nigerian Authorities Stage War Against Crypto And Fintech Platforms

Earlier this year, particularly in February, the Central Bank of Nigeria (CBN) raised an alarm about significant untraceable transactions occurring via crypto exchanges and contributing significantly to the instability associated with Nigeria’s Naira currency.

The CBN spotlighted Binance Nigeria as a notable facilitator of the hideous transactions, stating that the trading platform had processed and finalized transactions estimated to be worth about $26 billion.

Consequently, the Nigerian authorities charged Binance to court on counts of financial crime offenses ranging from money laundering, tax evasion, aiding customers to evade tax, etc. How events unfold for both parties remains uncertain. However, a potential settlement between both parties could take a long time, which does not depict a favorable outcome for either entity.

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Read Also: Binance To End All Naira (NGN)-Related Services. What Nigerian Users Must Do

In addition, the CBN ordered fintech firms operating within the Nigerian axis to block accounts of customers running crypto transactions, adding that defaulters should be reported to the appropriate law enforcement agents for follow-up, which depicts the possibility of strict punishment measures for offenders.

Meanwhile, the Nigerian Securities and Exchange Commission (SEC) has moved to ban peer-to-peer (P2P) cryptocurrency transactions with Naira. The Nigerian SEC Director, General Emomotimi Agama, while speaking about delisting the Naira from P2P, noted that it would be crucial in protecting the Nigerian currency from manipulation that has seen it drastically lose value.

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Delisting Naira from P2P Platforms: A Potential Solution

Agama emphasizes the recent surge in peer-to-peer (P2P) crypto trading and its reported impact on the Naira’s exchange rate. To address concerns about market manipulation in the P2P space, the SEC is considering delisting the Naira as a trading currency on these platforms.

Read Also: Binance To End All Naira (NGN)-Related Services. What Nigerian Users Must Do

The Commission released a statement outlining this proposal, with Dr. Agama saying: “One of the things 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.”

He continued by “enjoining participants in the crypto space to be patriotic enough to name and shame those that are involved in disrupting the markets negatively.” The SEC believes this measure will help to mitigate illegal activities and stabilize the Naira.

Balancing Innovation and National Interest

Dr. Agama acknowledges the potential of blockchain technology and cryptocurrencies. He highlights the SEC’s commitment to fostering a regulatory environment that encourages innovation while safeguarding national economic interests.

This was highlighted in a statement from the Commission, which quoted Dr. Agama saying: “We want to assure that this management will ensure that people or institutions that require registration with the SEC are quickly licensed.

We assure you that we will give guidance when necessary and do well to streamline the processes to make it less difficult.” The SEC is currently developing comprehensive guidelines for the digital asset sector, encompassing areas like crypto wallets, custody services, and fund management.

Collaboration for a Thriving Digital Asset Market

The SEC is actively seeking cooperation from industry stakeholders, including cryptocurrency exchanges and wallet providers. The aim is to create a well-regulated digital asset marketplace that contributes positively to Nigeria’s economic growth.

Dr. Agama encouraged open communication and urged industry participants to identify and report any harmful practices within the market. He stated: “I want to seek your cooperation in dealing with this as we roll out in the coming days the regulations that would take control of these areas.

Together, I am confident that we can weed out bad actors and harness the immense potential of this progressive technology for the benefit of all Nigerians in tandem with this government’s renewed hope agenda.”  

This stricter regulatory stance follows a series of events that have impacted the Nigerian crypto landscape. The classification of cryptocurrency trading as a national security concern by the National Security Adviser (NSA) in February 2024 marked a significant shift.

Subsequently, the Central Bank of Nigeria (CBN) directed fintech companies to restrict accounts associated with crypto transactions and report them to law enforcement. These actions, alongside the SEC’s proposed fee increase for crypto exchange registration from 30 million naira ($18,620) to 150 million naira ($93,000), indicate a more cautious approach from financial regulators.

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Read Also: Ezyswap: The Most Reliable Way To Sell Crypto For Naira

Industry Response and the Path Forward

The Blockchain Industry Coordinating Committee of Nigeria (BICCON) previously sought discussions with the SEC to establish a common ground for crypto regulation. Stakeholders within the industry, like the Blockchain Technology Association of Nigeria (SiBAN), have attributed the rise of P2P trading to the lack of clear regulations.

Moving forward, collaboration between the SEC, industry players, and government agencies will be crucial for establishing a balanced and effective regulatory framework for the Nigerian cryptocurrency sector.

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This decision comes in the wake of escalating regulatory pressures from the Nigerian government, with allegations and investigations surrounding Binance’s operations in the country.

#Binance to discontinue all NGN-related services.

More here https://t.co/dBJqBBBeTz

— Binance Africa (@BinanceAfrica) March 5, 2024

Read Also: CZ Says Binance Has Issued Cease and Desist Order Against ‘Binance Nigeria Limited’: Details 

Binance Nigeria: Tensions and Uncertainties

Binance’s exit from Nigeria is fueled by a cloud of uncertainty and tension. While the exact reasons for this withdrawal have not been explicitly disclosed, the company has been under increasing scrutiny by Nigerian authorities in recent days.

Accusations of currency manipulation and the recent detainment of Binance executives have undoubtedly played a role in shaping this decision. This atmosphere of uncertainty has left users apprehensive about the safety and security of their NGN holdings on the platform.

Clear Timeline for Discontinuation of NGN Services

Binance has provided a clear timeline for the phased discontinuation of NGN services to facilitate a smooth transition for its millions of users:

– March 5, 2024, 2:00 PM UTC: Delisting of NGN and all corresponding trading pairs from Binance P2P.
– March 6, 2024, 3:00 AM UTC: Removal of NGN as a supported payment option on Binance Pay.
– March 6, 2024, 3:00 AM UTC: Delisting of NGN from Binance Auto-Invest with users advised to withdraw their NGN investment plans.
– March 7, 2024, 3:00 AM UTC: Closure of all existing NGN trading pairs on the spot market.
– March 8, 2024, 6:00 AM UTC: Discontinuation of NGN withdrawals.
– March 8, 2024, 8:00 AM UTC: Automatic conversion of remaining NGN balances to Tether (USDT) at a predetermined exchange rate.

Impact on the Nigerian Crypto Community

The abrupt withdrawal of Binance’s services will have a significant impact on Nigerian crypto enthusiasts who have heavily relied on the platform for their trading activities.

The short notice provided for withdrawing or converting NGN to USDT may present challenges for users, especially those unaccustomed to alternative platforms or intricate cryptocurrency transactions.

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Read Also: Nigerian BDC Operators Call For Binance Ban to Strengthen the Devalued Naira

Uncertain Future for Crypto Regulation in Nigeria

As Binance disassociated from NGN on its platform, it has certainly left a notable void in the local crypto landscape in the most populous country in Africa. Questions linger about the future of crypto regulation in the country.

While uncertainties prevail, it is essential to acknowledge that other platforms continue to operate within Nigeria. The evolving global cryptocurrency scene hinges on regulatory developments and the resilience and innovation within the crypto community.

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The CBN’s report, which was shared with the crypto community by WrathofKahneman (@WKahneman), delves into Central Bank Digital Currencies (CBDCs), focusing on various critical aspects, including the core concepts, implications on fiscal system stability, financial inclusion, and more. Its primary goal is to provide professionals and the general public with a clear understanding of CBDC economics.

The Central Bank of Nigeria has released a report, "Economics of Digital Currencies," in which the 2020 #Ripple report on CBDCs figures rather noticably in a number of places, e.g.,https://t.co/tIR1Gxo0lY pic.twitter.com/yQFL0CWOQe

— WrathofKahneman (@WKahneman) October 26, 2023

Read Also: Nigerian BDC Operators Call For Binance Ban to Strengthen the Devalued Naira

CBN Highlights Global Trends

The CBN emphasizes that the proliferation of blockchain-based currencies has prompted monetary regulators worldwide to explore CBDCs. It argues that this move is a response to the risks posed by privately issued electronic cash to financial systems. The CBN points out four global trends that have motivated central banks worldwide to consider CBDCs:

Decline in Physical Currency Usage: The use of physical currency for business transactions and payments has been steadily decreasing. CBN supports this claim by referencing a study revealing that mobile wallet payments exceeded cash payments globally for the first time in 2021. The study also predicts that by 2024, cash will account for just 13% of in-store transactions worldwide.

Anticipation of Government-Regulated Tokens: Central banks are exploring digital currencies due to the growing interest in issuing government-regulated tokens, especially in response to the rising prominence of privately controlled cryptocurrencies. Ripple’s report is cited in support of this point, based on a survey of over 1,600 financial professionals from 22 countries. It found that 85% of payment industry leaders worldwide believe their countries will introduce digital tokens within the next four years.

Read Also: Banks Fear as Nigeria Set To Become the First African Country to Launch Its Own Digital Currency

The CBN’s CBDC Initiative: Notably, Nigeria stands among the select nations that have already introduced and fully enacted a CBDC, known as the eNaira. This significant development occurred in October 2021. The CBN introduced the eNaira with the hopes of accelerating financial inclusion, promoting cheaper and faster remittances, enhancing monetary policy effectiveness, and improving tax collection.

The CBN’s report, with insights from Ripple, provides a clear view of the evolving landscape of CBDCs globally. It also has invaluable experience, thanks to the eNaira.

Quoting from Ripple’s work shows that the payment firm is also on the right track in CBDC development. We are yet to hear of any new developments between the CBN and Ripple, but XRP could be a perfect token for a CBDC project and is currently being considered by the Bank of France.

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Binance is a global online exchange platform where users can trade cryptocurrencies regularly, supporting a wide range of commonly traded digital assets.

Read Also: Binance Releases Latest Proof of Reserve Report for Bitcoin, Ethereum, XRP and 27 Altcoins

Binance’s Dominance in Liquidity Generates Concerns

According to NAN, Alhaji Aminu Gwadebe, the President of ABCON, raised concerns about Binance’s increasing influence in the trading landscape. He noted that Binance has become the go-to platform for investors and exporters, dominating both the Investor and Exporters window and the parallel market.

With an impressive trading volume of 1.2 million transactions per second, Binance stands as the most liquid market. Gwadebe emphasized the need to challenge this dominance through local content and unique market characteristics.

Gwadebe expressed his worry regarding the prevailing pessimism in the foreign exchange market, highlighting that it erodes market confidence. He attributed the pressure on the naira to various factors such as currency hoarding by banks and oil companies, school fee payments, speculative activities, and round-tripping.

Gwadebe commended the current government’s efforts in combating illegal behavior in the foreign exchange market, emphasizing the objective of unification.

Read Also: CZ Says Binance Has Issued Cease and Desist Order Against ‘Binance Nigeria Limited’: Details

CBN’s Expectation of Remittances from NNPC

Gwadebe expressed hope that the recent removal of petrol subsidies would enable the Central Bank of Nigeria (CBN) to receive remittances from the Nigerian National Petroleum Corporation (NNPC). He highlighted that when the subsidy was in place, the remittance to the CBN from NNPC was zero.

This change could provide the CBN with the necessary liquidity and inflows to defend the naira. Gwadebe emphasized the importance of creating a friendly, competitive, and transparent system to attract more investors to the market.

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Calls for Legislative Protection of Investors

The ABCON President urged the National Assembly to enact legislation that safeguards investors in the market. Strengthening investor protection measures can attract more participants and contribute to market stability.

Clarification on Revoked BDC Licenses

Gwadebe discredited reports of the Central Bank of Nigeria revoking licenses of 2,698 Bureaux De Change (BDC) operators, stating that the list provided was incorrect and unconfirmed.

He mentioned that the CBN has not released an official comprehensive list stating which licenses have been revoked or remain valid.

Read Also: Banks Fear as Nigeria Set To Become the First African Country to Launch Its Own Digital Currency

BDC Operators Advocate for Increased Involvement in the Forex Market

Previously, BDC operators called for increased participation in the foreign exchange market to ensure the success of the new exchange rate policy implemented by the CBN.

They expressed dissatisfaction with the exclusion of BDCs from the Investors and Exporters window, as they play a crucial role in addressing the retail end of the market and maintaining exchange rate stability.

The debate surrounding Binance’s operations in Nigeria continues, as BDC operators appeal for a ban to alleviate pressure on the naira. The involvement of various stakeholders and the Legislative Assembly’s assessment of regulations and investor protection measures will be critical in shaping the future of the Nigerian forex market.

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The top-ranked digital assets exchange by daily trading volume and the largest blockchain ecosystem Binance, has been the latest target for the United States Securities and Exchange Commission (SEC) alongside Coinbase in the agency’s expedition to achieve crypto regulation by enforcement.

Read Also: Banks Fear as Nigeria Set To Become the First African Country to Launch Its Own Digital Currency

In the wake of the 13-charge lawsuit filed against Binance by the Gary Gensler-led SEC on June 5, the attention of the Nigeria Securities and Exchange Commission was drawn to the website operated by an entity dubbed “Binance Nigeria Limited.” The platform which offers crypto trading services has been soliciting the Nigerian public to trade crypto assets on its various web and mobile applications. 

Given that “Binance Nigeria Limited” is unregistered with SEC Nigeria and hence, its services unregulated by the Commission, SEC Nigeria declared the operations of “Binance Nigeria Limited” illegal and warned Nigerians to desist from patronizing the platform. 

Per the circular issued on June 9, Binance Nigeria Limited was directed to immediately stop soliciting Nigerian investors in any form whatsoever by SEC Nigeria. The Nigerian securities commission added that further regulatory actions would be taken against “Binance Nigeria Limited.” Consequently, this development fueled more FUD against the Binance crypto exchange which has prompted Changpeng Zhao to address the issue.

Read Also: Why Tehlex is the king of Gift Card Platform in Nigeria

Binance CEO Responds

Reacting to the matter, the widely followed CZ implied that Binance has no relationship with the entity known as “Binance Nigeria Limited,” urging users to not believe everything they see in the news. Accordingly, the exchange founder noted that a cease and desist notice has been sent to the said entity which he called a scam. 

Binance have issued cease & desist notice to the scammer entity "Binance Nigeria Limited".

Don't believe everything you read in the news.

— CZ Binance (@cz_binance) June 18, 2023

On the other hand, Binance is pushing to obtain clarity from SEC Nigeria. “The entity mentioned in the circular is not affiliated with us. We are therefore seeking clarity from the Nigerian SEC and remain committed to working with them cooperatively on the next steps,” a Binance spokesperson said.

As recently published, Binance CEO has expressed his delight and relief as the court resolved a protracted dispute in its lawsuit with United States SEC.

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Nigeria is set to officially launch the eNaira that was initially slated to launch on 1st October 2021 but delayed due to the preparation of the country’s 61st Independence Day celebrations.

Read Also: Could Amazon Integrate Ethereum and Cardano as Bitcoin Remains Key for Its Crypto Payments? Insider Says Yes

As described by the central bank of Nigeria (CBN), the launch of eNaira is the result of years of research in advancing the boundaries of the payments system in order to make financial transactions easier and seamless.

This launch represents the first phase of the CBDC pilot project known as Project Giant. The digital currency will be a legal tender in the country and have non-interest-bearing CBDC status.

In a statement on Saturday 23rd October, Osita Nwanisobi, CBN Director of Corporate Communications, said:

“Given that the eNaira is a journey, the unveiling marks the first step in that journey, which will continue with a series of further modifications, capabilities and enhancements to the platforms.”

Read Also: Charles Hoskinson: Lots of New Technologies Will Be rolled out on Cardano in the Next 3 to 9 Months

It’s worth noting that the CBN banned crypto-related transactions via licensed banks in Nigeria back in February, citing its high volatility and investment risks. The launch of eNaira is targeted at creating a safer alternative to regular cryptocurrencies.

However, according to a Guardian report, the ban relatively has no effect on the use of various digital currencies in the country, as exchanges reported increasing registrations.

Based on data provided by Paxful, the most popular crypto exchange in Africa, Nigeria has one of the highest crypto adoption rates in the world. The data shows that Nigeria is second only to the United States in terms of crypto trading.

Why eNaira Launch Is a Cause of Worry for Banks

There have been mixed reactions around the launch of the eNaira. Some are excited to see how it would make transactions seamless, especially cross-border remittance, while others are pessimistic about its effect on banks.

Read Also: VeChain Foundation Announces Vote to Launch PoA 2.0, Major Upgrade to VeChainThor Blockchain

According to a Guardian report, bank executives are extremely worried that widespread adoption of the eNaira could reduce the volume of businesses executed by banks and transaction revenues.

This fear comes from the fact that eNaira transactions will be peer-to-peer (p2p), indicating that it needs no bank to operate.

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