P2P Crypto Trading in Nigeria: SEC Chief Hints at Ban

Acting Director General Emomotimi Agama, who met with the crypto community virtually, invoked patriotism and urged market participants to fish out naira manipulators.

P2P Crypto Trading in Nigeria: SEC Chief Hints at Ban
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The Nigerian Security and Exchange Commission’s (SEC) Acting Director General Emomotimi Agama has hinted at an imminent plan to ban naira exchanges from all peer-to-peer (P2P) cryptocurrency platforms. The newly appointed acting SEC chief said this during a virtual meeting with the Blockchain Industry Coordinating Committee of Nigeria (BICCoN) on Monday, May 6. 

Dive in 

  • The value of Nigeria’s currency, the naira, has been unsteady and declining over the past decade due to rafts of economic challenges. This year has been particularly harsh, with the naira losing over half its worth compared to last year. 
  • The Nigerian government believes P2P trading makes the already-weakened naira to market manipulations. There are concerns over how P2P merchants determine exchange rates. 
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Be smart: Nigeria runs a floating exchange rate regime in which forces of demand and supply determine the value of naira against the dollar or any other currency. Until mid-2023, the country officially operated a dual exchange rate system.

However, there is also an unofficial parallel market that has historically been influential in determining exchange rates, mainly because it’s more accessible to everyone. The growth of P2P trading essentially created a second parallel market that’s become even more influential.
  • Agama highlighted the concerns surrounding cryptocurrency P2P traders and their potential impact on the naira’s exchange rate. He believes this situation underscores the need for collective action and collaboration within the financial market ecosystem.
  • He encouraged participants in the cryptocurrency space to be patriotic and name those who are disrupting the market negatively.
  • He added that the commission is developing regulatory guidelines for the digital asset sector.
  •  He assured that people or institutions requiring SEC registration will be licensed quickly.
  • The BICCoN requested the establishment of a working group to help tackle the various challenges facing the crypto space and move the market forward.

Key quote  

  • According to Agama:
“One of the things that needs to be done is delisting the naira from P2P space to avoid the level of manipulation that is currently happening, enjoining participants in the crypto space to be patriotic enough to name and shame those that are involved in disrupting the markets negatively.” 
  • He added:
“I need your cooperation as we are introducing new regulations. Our goal is to quickly license those requiring SEC registration. Rest assured, we will provide guidance and streamline processes to make it easier. Let us work together for a smooth transition.”

Before now 

  • The Central Bank of Nigeria (CBN) initially showed interest in working with the crypto market last December when it permitted banks to open accounts for licensed crypto exchanges. This reversed a February 2021 directive from the CBN that prohibited banks from working with the crypto industry. 
  • The country’s foreign exchange woes appear to have put those interests in the backseat as the government looks to stabilize the economy. 
  • Nigeria’s crackdown on cryptocurrency started in February with crypto exchange Binance. The move resulted in the arrest of two Binance employees. 
  • Binance ultimately discontinued its peer-to-peer feature for Nigerian users. 
  • Recently, four fintech startups operating in the country have been directed to block accounts of customers engaging in cryptocurrency transactions and report the transactions to law enforcement agencies.