Nigerians Shocked as CBN and FG Clamp Down on Cryptocurrency Market

A growing number of Nigerian residents are expressing concern following the crackdown on crypto assets across the financial industry.

Following the classification of cryptocurrency trading as a national security issue by Nigeria’s National Security Advisor (NSA), at least four new fintech companies operating in the country (Opay, Moniepoint, Paga and Palmpay) will block the accounts of customers who transact cryptocurrency and report those transactions to law enforcement authorities.

Nigerian fintechs close their doors to the crypto industry

Last week, the Central Bank of Nigeria (CBN) banned prominent fintech companies, including Kuda, Opay, PalmPay and Moniepoint, from accepting new customers.

The apex bank’s action was related to an ongoing evaluation of fintech companies’ Know Your Customer procedures. These companies have been under investigation in recent months due to concerns about money laundering and terrorist financing.

Africa’s most populous country ranks second in Bitcoin interest globally, even though the FG had banned banks from providing services to cryptocurrency clients. The African country, which has long struggled with high inflation, has blamed the crypto sector party for the recent depreciation of the naira.

The news continues after this announcement.

The news continues after this announcement.

Consequently, the Economic and Financial Crimes Commission (EFCC) had obtained a court order to freeze at least 1,146 bank accounts belonging to different individuals and companies that were allegedly involved in illicit foreign exchange transactions.

OPay warned in a notification on Friday that it would impose severe penalties on users who disobey its policies, which are in line with the CBN’s position on cryptocurrency trading.

  • “Please note that OPay prohibits the trading of any virtual money, including cryptocurrencies, as per instructions issued by the CBN. “Any account that engages in this type of activity will be closed and regulatory authorities will be given access to customer information.” the fintech firm said.

This seems a contradiction to the CBN’s previous stance. It had previously directed financial institutions to assist with account opening, offer certain settlement services and serve as intermediaries for companies transacting cryptocurrency assets in a circular published late last year.

Contradictory signals

Last year, the CBN lifted a two-year restriction on crypto transactions, and discussions on cryptocurrency licenses were underway between the Securities and Exchange Commission (SEC) and at least three cryptocurrency exchanges.

CBN had previously refuted a report claiming that it had issued an order requiring all banks and financial institutions to identify individuals or organizations that transact with cryptocurrency exchanges and ensure that those accounts are placed under “Do Not Publish” instructions. debit”, which are orders from banks or other financial institutions to limit specific transactions in a customer’s account, for six months.

Market leaders consider this measure counterproductive, since most P2P transactions occur in opaque channels. Most P2P transactions, according to Ray Youssef, CEO of NoOnes, take place on WhatsApp, Telegram, cafes and public spaces rather than Binance or any other platform.

  • “On Binance P2P, NoOnes or any of these other platforms, most peer-to-peer activity does not occur. They take place in cafes, on the streets, on Telegram and WhatsApp and everywhere else.
  • “Most peer-to-peer communication takes place there. And $60 billion, if I may estimate, through centralized exchanges. Because Nigerians are so resourceful and can find uses for things that were not necessarily intended for them, I think most of it is peer-to-peer volume that they are also hiding,” he continued.

The FG had previously accused Binance of encouraging currency speculation that caused the value of the naira to fall. He then invited two of the Binance executives to the nation, after which they were detained and one of them managed to flee.

Nigeria has the largest crypto economy in Africa in terms of trade volume, with many of its inhabitants using crypto assets amid its very young and vibrant population.

However, the newly appointed Director General of the SEC has earned the optimism and trust of the Nigerian blockchain community. The new SEC chair’s pro-crypto history is seen as an added benefit to the regional crypto sector.

Emomotimi Agama, former Managing Director of the Nigerian Capital Markets Institute (NCMI), has been appointed by the Nigerian President, Bola Tinubu, as the new Chairman of the SEC.