In light of a pivotal meeting scheduled for Monday between the Securities and Exchange Commission and digital asset operators, the Federal Government may consider suspending the $56.7 billion peer-to-peer cryptocurrency market.
According to Chainalysis’ 2023 Geography of Cryptocurrency Report, Nigeria saw a nine percent year-over-year growth in crypto transactions, totalling $56.7 billion between July 2022 and June 2023, as the United States-based blockchain analysis firm reported.
The SEC’s latest step suggests a wider push from the Federal Government to strengthen regulatory supervision in the cryptocurrency sector, responding to escalating concerns regarding illicit activities and the manipulation of the naira exchange rate.
Truetells Nigeria recalls that earlier this week, the Central Bank of Nigeria barred major fintech firms from accepting new customers as part of an ongoing assessment of their Know-Your-Customer process.
In response to the regulatory action, major fintech companies such as Opay and PalmPay sent emails to their customers on Friday cautioning them against trading in cryptocurrency or any virtual currency on their platforms and warned of potential account suspension for those found participating in such activities.
The threat to block accounts has sparked significant criticism, especially from the 33.4 million individuals actively involved in cryptocurrency trading, many of whom depend on it as their main source of income.
According to PUNCH, during the scheduled Monday meeting, the government could announce a temporary pause in P2P crypto trading to facilitate the creation of a comprehensive set of regulations for more effective oversight of the sector.
Insiders briefed on the meeting hinted that the government might decide to collaborate with crypto stakeholders to devise new regulations for enhanced oversight, ruling out the idea of temporarily halting P2P crypto trading.
As of Sunday, the exact decision the government might take during or after the meeting with crypto operators remained uncertain.
In a notice shared on its X handle on Saturday, the Blockchain Industry Coordinating Committee of Nigeria stated that the meeting had been arranged by the new Director General of the SEC, Dr. Emotimi Agama.
BICCoN said, “The newly appointed Director General of the Nigeria Securities and Exchange Commission has proposed an industry-wide meeting with the Nigeria blockchain community. The meeting will be facilitated by the Blockchain Industry Coordinating Committee of Nigeria.”
The SEC has not officially confirmed the Monday meeting, but sources familiar with the commission confirmed its occurrence on Saturday, adding that nothing has been finalized yet.
In 2021, the CBN prohibited banks and financial institutions from servicing cryptocurrency providers’ accounts, but it rescinded the ban in December 2023.
Concerns arose in February over Binance’s activities, particularly on its peer-to-peer platform. These included setting price caps on USDT trading, which authorities claimed contributed to the naira’s devaluation and Nigeria’s economic instability.
CBN Governor Yemi Cardoso expressed concern over the significant transaction volume through Binance Nigeria, stating that $26 billion had flowed through the platform in the past year from undisclosed sources.
In response to the crackdown, the crypto exchange halted all naira services, including deposits, withdrawals, and trading pairs, beginning in early March 2024.
The Chairman of BICCoN, Lucky Uwakwe, disclosed in an interview with PUNCH that the group aims to negotiate with the regulator.
The regulator has implemented stricter guidelines for digital asset operators and proposed an increase in registration fees this year.
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 on those that use the technology for market manipulation of naira.
“We also hope that innovation in the industry 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.”
On his part, the President of Stakeholders in Blockchain Technology Association of Nigeria, Obinna Iwuno, said there had been no official communication from regulators regarding the ban on cryptocurrency transactions.
He said, “There is a whole lot going on. It is not just clear the direction as we speak, but hopefully, on Monday, we will get to have a position.
“What we have done to solidify our position with the Nigerian government is that local exchanges stopped their naira services.”
Iwuno clarified that the government attributed the depreciation of the naira to cryptocurrency, prompting operators to cease their activities.