Nigeria’s crypto industry has been met with a mix of hope and concern as stakeholders express their dissatisfaction with President Bola Tinubu’s actions and policies, which have left the industry in a state of uncertainty over the past year.
President Tinubu had initially promised to legalize crypto and blockchain technology in Nigeria’s banking and finance sector as part of his campaign manifesto. This decision was seen as a way to strengthen the country’s fragile economy.
However, the recent actions taken by the administration against the crypto industry have left the young population in Nigeria feeling confused. Olumide Adesina, an analyst at Quantum Economics, emphasized the need for clarity and support to unlock the sector’s potential.
Adesina highlighted that the crackdown on peer-to-peer trading, the arrest of a Binance executive, and accusations of currency manipulation by state officials have temporarily tarnished the industry’s reputation, despite the high level of interest from the country’s dynamic youth population.
Nathaniel Luz, CEO of Flincap, a liquidity platform for crypto exchanges, believes that President Tinubu has a unique opportunity to shape Nigeria’s emerging crypto sector, similar to how previous leaders influenced the banking industry. Luz stated that the crypto industry is maturing and called for more action from the administration.
In May 2023, the Nigerian Securities Exchange Commission (SEC) introduced regulations for digital assets, indicating a desire to find a middle ground between a ban and a lack of regulation. In December, the SEC lifted its ban on banks operating accounts for crypto service providers, while the central bank recognized the need to regulate the activities of VASPs, including cryptocurrencies and assets.
The Central Bank released initial guidelines in January for banks opening cryptocurrency accounts, but trading and holding virtual assets within their portfolios remain prohibited. The guidelines include stringent Anti-Money Laundering (AML), Know Your Customer (KYC), and other measures, along with “prudent” transaction limits and a prohibition on cash withdrawals from crypto accounts.
In May 2024, Nigeria’s government began preparing to introduce new regulations that would ban P2P cryptocurrency exchanges involving the national currency, the Nigerian naira.
Overall, there is a need for the Nigerian government to provide clarity and support to the crypto industry, as it has the potential to greatly contribute to the country’s economy. President Tinubu has the opportunity to shape and nurture the industry, but further action is required to ensure its success.