The Nigerian government’s position on the cryptocurrency industry needs to be clarified as its recent actions have created confusion within the community, according to Nathaniel Luz, co-founder and chief marketing officer of Flincap, a local crypto over-the-counter exchange.
This issue arose after reports emerged that local crypto users were unable to access the websites of various crypto exchanges, such as Binance and OctaFX, using traditional telecommunication providers. This raised speculation about a potential government ban on crypto platforms.
In an interview with Cointelegraph, Luz expressed the view that the Nigerian government appears uninterested in fostering a positive relationship with the crypto community. The government attributes the current exchange rate of 1,800 Nigerian naira to $1 to OTC traders trading Tether (USDT) for naira on the peer-to-peer market.
Luz argues that blaming OTC traders for the decline in the naira’s value is incorrect, as the crypto industry is not responsible for the economic downturn or the decline of the naira. He highlights factors unrelated to the local crypto industry, such as excess naira, insufficient amounts of US dollars, heavy reliance on imports, emigration, currency exchange, and uncertainty surrounding Eurobond payments.
In December 2023, the Nigerian government lifted a ban on cryptocurrencies that had been imposed by the country’s Securities and Exchange Commission and the Central Bank of Nigeria in 2021. This allowed crypto exchanges to apply for licenses in Nigeria.
However, many crypto startups are still working towards meeting the licensing requirements, which include a paid-up capital of 500 million naira ($340,000) and an application fee of 30 million naira ($20,000). Luz suggests that the Nigerian government should focus on addressing the licensing issues for local exchanges instead of blaming the local crypto ecosystem for its foreign exchange problems.
Nigeria currently holds the title of the largest peer-to-peer market in the world, a position it attained after the Central Bank of Nigeria banned institutions from buying and selling crypto in 2021.