Nigeria’s crypto industry has experienced a mix of hope and concern, with stakeholders expressing their dissatisfaction with President Bola Tinubu’s government’s actions and policies over the past year. Tinubu, in his campaign manifesto, promised to legalize crypto and blockchain technology in the country’s banking and finance sector, recognizing its potential to strengthen Nigeria’s fragile economy.
However, recent actions by the administration have left the young population in Nigeria feeling confused and bewildered, particularly regarding the crypto industry. Olumide Adesina, an analyst at Quantum Economics, stressed the need for clarity and support to unlock the sector’s potential. Adesina highlighted that recent actions, such as the crackdown on peer-to-peer trading, the arrest of a Binance executive, and accusations of currency manipulation by state officials, have cast a negative light on the industry, despite the high level of interest from the country’s young and dynamic population.
Nathaniel Luz, CEO of Flincap, a liquidity platform for crypto exchanges, emphasized President Tinubu’s unique opportunity to shape Nigeria’s emerging crypto sector, similar to how previous leaders influenced the banking industry. Luz stated that the crypto industry is maturing, and it is crucial for President Tinubu to make decisive decisions on how to proceed. He also expressed his belief that the administration has not done enough and urged for more action.
In terms of crypto policies over the past year, the Nigerian Securities Exchange Commission (SEC) published regulations for digital assets in May 2023, indicating a desire to find a middle ground between a ban and a lack of regulation. In December, the SEC lifted its ban on banks operating accounts for crypto service providers, and the central bank recognized the need to regulate activities of Virtual Asset Service Providers (VASPs), including cryptocurrencies and assets. The Central Bank released initial guidelines in January for banks opening cryptocurrency accounts, but trading or holding virtual assets in their own portfolios remains prohibited. The guidelines also impose strict Anti-Money Laundering (AML), Know Your Customer (KYC), and other measures, with banks required to set “prudent” transaction limits and disallow cash withdrawals from crypto accounts. In May 2024, the Nigerian government began preparing to introduce new regulations that would ban P2P cryptocurrency exchanges involving the national currency, the Nigerian naira.
The question now arises: how much enforcement is too much when it comes to regulating and cleaning up the crypto industry?