The Federal Government, through the Securities and Exchange Commission, is set to delist the naira from all peer-to-peer crypto platforms as the government steps up efforts to tackle exchange rate manipulators and dollar racketeers.
The development came against the backdrop of the recent moves by the Federal Government to regulate Nigeria’s crypto market estimated at $57bn.
The newly-appointed Director-General of the Commission, Emomotimi Agama, disclosed the government’s latest plan during a meeting with members of the Nigerian blockchain industry on Monday.
The meeting was organised 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.
The PUNCH reports 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.
In March, SiBAN sought collaboration with the Federal Government for proper regulation after developing the Virtual Assets Service Providers Code of Conduct in 2022.
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 emphasise 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.”
Sunday PUNCH had reported that the proposed Monday meeting would see the government take decisive action on the sector.
Nigeria’s volume of crypto transactions grew by nine per cent year-over-year to $56.7bn between July 2022 and June 2023, according to the 2023 Geography of Cryptocurrency Report by Chainalysis, a United States-based international blockchain analysis firm.
Stakeholders seek collaboration.
In his remarks, the Chairman of the Fintech Association of Nigeria, Dr. Babatunde Obrimah, 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.”
Fintechs.
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 N59.33bn 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.