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Nigeria's National Security Advisor (NSA) is set to label cryptocurrency trading a threat to national security, signaling an imminent crackdown on peer-to-peer (P2P) crypto transactions, according to local media and sources from CryptoSlate.
The move follows the decision by at least three major Nigerian fintech startups – Moniepoint, Paga and Palmpay – to block accounts involved in crypto transactions and report these activities to law enforcement.
According to Tosin Eniolorunda, CEO of Moniepoint, the NSA classification is expected to pave the way for new regulations banning P2P cryptocurrency trading, with an official announcement expected soon.
This represents a notable shift in the regulatory stance, especially after the Bola Tinubu administration has already demonstrated a more lenient attitude towards crypto. In fact, in December 2023, the Central Bank of Nigeria lifted a two-year ban on crypto transactions, hinting at a more welcoming regulatory environment.
However, recent months have seen a reversal of this trend, with authorities accusing crypto speculators of exacerbating volatility in the foreign exchange (FX) market. The proposed ban on P2P trading is based on the Central Bank's claim that crypto traders are exploiting this method to manipulate the Nigerian naira through pump and dump schemes.
Central bank governor Olayemi Cardoso claimed in February 2024 that Binance facilitated $26 billion in untraceable transactions, leading to a crackdown on the exchange and the freezing of more than 1,000 bank accounts linked to P2P transactions.
On a related note, four major fintech companies were recently ordered to suspend the opening of new customer accounts, although the source of this directive remains unclear.
Moniepoint CEO Tosin Eniolorunda confirmed that the move was at the request of the NSA, which has expressed concerns about the ease with which fintech platforms facilitate the opening of accounts, particularly Tier 3 accounts.
Although an NSA spokesperson declined to provide further details, the development highlights the growing focus on the rapid proliferation of accounts facilitated by fintech startups. Traditional banks have long been concerned that these accounts serve as conduits for illicit funds.
In response to these concerns, the Central Bank changed its rules in December 2023, requiring fintech startups to verify the identity of all account holders by March 2024.
As Nigeria prepares for further regulatory measures in the crypto space, the fate of P2P commerce remains uncertain amid growing national security concerns and an evolving regulatory landscape.
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