• Sunday, May 26, 2024
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Crypto crackdown: SEC to delist naira from P2P platforms

How to manage crypto volatility and uncertainty

Nigeria plans to delist the naira from all Peer-to-Peer crypto platforms to reduce the manipulation of the local currency in the foreign exchange market.

Emomotimi Agama, Director General of the Securities and Exchange Commission, disclosed this during an interactive session with the Nigerian Blockchain Industry. This is expected to be part of regulations that will be rolled out in the coming days as Nigeria tightens the noose on the crypto industry.

“That is one of the things that must be done to save this space,” Agama said.

“The delisting of the naira from the P2P platforms is to avoid the level of manipulation that is currently happening,” Agama said as he solicited cooperation from stakeholders.

Agama, who tried to reassure the ecosystem’s stakeholders at the meeting, declared that the SEC was ready to work with everyone in the space. He noted that the commission is updating its guidelines to ensure best practices.

The SEC DG decried how some market players were manipulating the value of the naira and explained that it is why the commission is “seeking collaboration and help in making sure that the crypto environment is respected globally.”

He highlighted that the commission is working to ensure that institutions and people who need to be registered do so quickly and without bottlenecks.

Agama’s declaration is coming off the heels of a recent directive from the Central Bank of Nigeria to fintechs, mandating them to warn their customers against engaging in crypto transactions.

Last week, some fintechs (OPay, Palmpay, Kuda, Moniepoint, Kuda, and Paga) notified customers that they would close the accounts of anyone engaged in crypto or other virtual assets transactions and share their details with relevant authorities.

The fintechs noted that they were not licensed to trade cryptocurrencies or facilitate P2P transactions. Sources close to the matter say it is connected to the recent freezing of 105 accounts across nine fintechs suspected of illegal activities like unauthorised forex dealings, money laundering, and terrorism financing.

The Economic and Financial Crimes Commission (EFCC) secured an interim court order on April 24, 2024, to freeze these accounts for 90 days while investigations continue.

After the freeze, several fintechs, including OPay, Moniepoint, PalmPay, and Kuda Bank, were asked to temporarily suspend the opening of new accounts pending the CBN’s evaluation of its Know Your Customer process.

The frozen accounts are part of a larger EFCC probe into 1,146 bank accounts suspected of manipulating the FX market through cryptocurrency platforms. The commission believes that the owners of some of these accounts exploited cryptocurrency platforms to manipulate the FX market.

Tosin Eniolorunda, founder and chief executive officer of Moniepoint, recently urged crypto P2P participants to cease their activities due to its prohibition in the financial sector.

“If you are a peer-to-peer market player, you better stop it because it is prohibited in the financial sector, and you can get into trouble,” he warned.

Nigeria’s dance with crypto has taken many twists since the CBN banned banks and financial institutions from dealing in or facilitating transactions in crypto assets in February 2021, citing money laundering and terrorism financing concerns. This led to the rise of P2P crypto trading in the country.

Nigeria’s new direction towards P2P is part of a broader government crackdown on crypto platforms, particularly Binance, which began in February 2024. The crackdown forced Binance to halt naira operations and led to the arrest of two executives who visited Nigeria to discuss the matter with authorities.

Authorities blame crypto platforms for aiding currency speculations and fueling the rapid devaluation of the naira. Olayemi Cardoso, governor of the CBN, recently stated that $26 billion flowed through Binance Nigeria in a year from unidentified sources.

According to crypto experts, delisting the naira from P2P platforms will increase pressure on the naira, as traders will increase their demand for dollars for trade purposes.

“The pressure on the naira will be there. They have not done so yet. There is no formal memo or documentation from any of the regulators or policymakers at this time. I don’t even know the people who will announce whether it’s SEC, CBN, or ONSA,” said Chimezie Chuta, the founder and coordinator of Blockchain Nigeria User Group, one of the organisers of the stakeholder meeting.

According to crypto stakeholders, the naira’s delisting is expected to be temporary until a form of regulation for virtual asset providers is created.