The International Monetary Fund (IMF) has urged the Nigerian government to mandate global crypto trading platforms to register or obtain licenses to operate in the country, subjecting them to regulatory requirements.
This was disclosed in the IMF’s latest staff report for Nigeria, following the conclusion of its 2024 Article IV consultation with Nigeria.
Part of the report reads,
“Staff recommends that global crypto trading platforms be registered or licensed in Nigeria and subject to the same regulatory requirements applicable to financial intermediaries following the principle of the same activity, same risk, and same regulation”.
The financial agency further expressed concerns that the proliferation of crypto trading platforms in Nigeria poses a serious challenge to the nation’s financial stability.
They therefore urged Nigerian authorities to strengthen anti-money laundering and combating the financing terrorism (AML/CFT) preventive controls on crypto trading platforms. It emphasized the need for effective risk-based supervision of these platforms and other virtual asset service providers.
During a discussion with the IMF, the Nigerian authorities admitted that cryptocurrency platforms in the country are exerting undue pressure on the exchange rate, which is weakening the Naira. In a bid to stabilize the Forex Market, the government has imposed stricter rules on crypto platforms to ensure compliance with existing FX rules.
Recall that the government earlier this year imposed a ban on crypto exchange platform Binance, which the Central Bank of Nigeria (CBN) governor Yemi Cardoso disclosed that over $26 billion in illicit flows passed through the crypto platform last year.
In line with this, the Nigerian authorities detained two Binance senior executives on undisclosed charges as part of the crackdown. Bayo Onanuga, special adviser on information and strategy to President Bola Tinubu, said Binance profited substantially from its illegal transactions in Nigeria while the nation suffered huge losses.
Notably, Presidency and regulatory sources said the government decided to move against Binance following reports that currency speculators and money launderers were using them to execute criminal activities.
The Nigerian government therefore slammed Binance with a $10 billion fine, as retribution from the crypto exchange in desperate moves to salvage the value of the nation’s local currency. The Nigerian government’s retribution claim is coming months after Binance pleaded guilty and agreed to pay $4.3 billion to settle criminal money laundering charges levied by the U.S. Department of Justice.
Apart from Binance, other platforms such as Forextime, OctaFX, Crypto, FXTM, Coinbase, and Kraken, among others, were equally blocked in the country.
It is worth noting that Nigeria’s volume of crypto transactions grew by nine percent 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 of America-based international blockchain analysis firm.
The Federal Government is therefore considering the suspension of the $56.7bn peer-to-peer cryptocurrency market after a crucial meeting between the Securities and Exchange Commission, and digital asset operations.
The latest move by the SEC signals a broader effort by the Federal Government to tighten regulatory oversight within the cryptocurrency space amidst growing concerns over illicit activities and the manipulation of the naira exchange rate. Other sources privy to the meeting said the government might choose to engage the crypto stakeholders on a new set of rules that could be deployed to better regulate the space
