Dollar Speculation: FG To Ban Naira From Crypto Trading Platforms

The Federal Government, through the Securities and Exchange Commission, is set to delist the naira from all peer-to-peer crypto platforms as the government steps up efforts to tackle exchange rate manipulators and dollar racketeers.

The development came against the backdrop of the recent moves by the Federal Government to regulate Nigeria’s crypto market estimated at $57bn.

The newly-appointed Director-General of the Commission, Emomotimi Agama, disclosed the government’s latest plan during a meeting with members of the Nigerian blockchain industry on Monday.

The meeting was organised by the Blockchain Industry Coordinating Committee of Nigeria.

Agama confirmed that the government was currently drafting a new set of regulations to govern the crypto sector.

Operators in the crypto space have allegedly used the P2P platforms to manipulate the naira and the exchange rate.

 “That is one of the things that must be done to save this space; the delisting of the naira from the P2P platforms to avoid the level of manipulation that is currently happening. I want your cooperation in dealing with this as we roll out regulations in the coming days,” the SEC DG told the members of the local crypto community.

Agama’s announcement came barely a week after the Central Bank of Nigeria instructed payment service banks to caution their customers against engaging in crypto transactions.

The PUNCH understands that some local exchanges in the country, such as OKX, Bitbarter and some platforms under the membership of Stakeholders in the Blockchain Technology Association of Nigeria had already stopped naira services in solidarity with the government.

In March, SiBAN sought collaboration with the Federal Government for proper regulation after developing the Virtual Assets Service Providers Code of Conduct in 2022.

However, the SEC DG urged members of the crypto community in Nigeria to “name and shame” the players involved in the manipulation of the naira.

He maintained that some bad players in the industry were manipulating the national currency, an act that the government was determined to deal with.

Agama said, “We ask with all sense of sincerity that those involved in sharp practices cease. We encourage you to reach out to us by naming and shaming those involved.

“This nation has a future, and this future is dependent on this community. For us at the SEC, our interest is to provide an enabling environment for fintech to thrive, and by so doing; we expect the fintech community to reciprocate by doing the right thing.

“Patriotism can never be wished away. Whatever we do that would bring dishonor to our country, we must try to avoid it. What is very critical and has brought about this meeting are the concerns regarding crypto P2P traders and their effect on the naira.”

He maintained that the SEC under his watch was poised for an innovative digital asset regulatory regime that would sustain Nigeria as Africa’s digital asset powerhouse with diverse solutions like real-world asset tokenization.

This, according to him, will drive wealth and catalyse the country’s capital market.

He said, “We must explore innovative solutions to this problem and strike the right balance between encouraging innovation and safeguarding our national economic interests. This we will do in a friendly and firm manner to enable us to achieve the desired result.

“On that note, I want to emphasise that we are working on different fronts to sustain decent practices within our market. However, we are here to meet ourselves to know those playing within the sector decently and are open to hearing your suggestions on how we can effectively manage all obscure cryptocurrency trading activities within our jurisdiction, P2P inclusive, irrespective of the challenge we all know that P2P trading poses.”

Sunday PUNCH had reported that the proposed Monday meeting would see the government take decisive action on the sector.

Nigeria’s volume of crypto transactions grew by nine per cent 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-based international blockchain analysis firm.

Stakeholders seek collaboration.

In his remarks, the Chairman of the Fintech Association of Nigeria, Dr. Babatunde Obrimah, commended the SEC DG for the bold steps and the proposed partnership with the ecosystem.

He pledged the association’s commitment to working with the DG to sanitise the virtual ecosystem.

On its part, BICCoN requested the setting up of a working group to tackle the various challenges facing the crypto space and move the market forward.

The co-founder of a local exchange, Bitbarter.io, Chukwuemeka Ezike, told The PUNCH that operators within the ecosystem were willing to support and work with the government to ensure that some of the issues relating to the naira’s value were resolved.

While acknowledging that huge investments have been put into building their platforms, he said it would be imperative to work out possible resolutions to enhance the sector’s growth.

On Saturday, the Chairman of BICCoN, Lucky Uwakwe, had said that the group would be seeking to reach a middle ground with the regulator.

He said, “Anything that can disrupt the system should not be permitted. If the platforms are being used for things that are against the regulations, I think the CBN decision is OK. I don’t see anything wrong with that. It behoves the companies now to get their KYC right.

In 2021, the CBN restricted banks and other financial institutions from operating accounts for cryptocurrency service providers.

However, in December 2023, the financial regulator lifted the ban.

But fresh concerns emerged in February over the activities of the largest cryptocurrency exchange in the world, Binance, on its peer-to-peer platform, especially on issues relating to its price cap on USDT trading.

Authorities said those activities contributed to the depreciation of the naira.

On March 8, Binance stopped its naira services after two of its executives were detained by the Nigerian authorities

A presidential spokesman, Bayo Onanuga, said Binance could destroy the Nigerian economy by arbitrarily fixing the foreign exchange, rate if not stopped.

While confirming that the government has taken strict action against the website, Onanuga said, “If we don’t clamp down on Binance, Binance will destroy the economy of this country. They just fix the rate.”

“We have saboteurs. Look at what Binance is doing to our economy. That is why the government moved against Binance. Some people sit down using cyberspace to dictate even our exchange rate, hijacking the role of the CBN.

“They just sit down and fix anything they like. It’s sabotage, and we are trying to prevent that from happening henceforth.”

THE PUNCH

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