Nigeria Cracks Down on Crypto Trading Amid Security Concerns

Nigeria is tightening its grip on cryptocurrency transactions as the government instructs fintech companies to report all crypto trades to relevant authorities. This move comes amidst an ongoing investigation into accounts suspected of illegal activities such as unauthorized forex dealings, money laundering, and terrorism financing.

Why this matters: The Nigerian government's crackdown on cryptocurrency trading highlights the growing concern among governments worldwide about the potential risks posed by virtual currencies to financial stability and national security. As more countries take similar measures, the future of crypto trading and its impact on the global economy remain uncertain.

At least two prominent fintechs, OPay and PalmPay, have notified their customers to refrain from crypto trading due to regulatory uncertainty and potential financial risks. In a notice issued on Friday, OPay stated, "In compliance with the CBN directive, please note that OPay prohibits any cryptocurrency and all virtual currency trading. Any account engaging in such activities will be closed, and customer information will be shared with regulatory authorities. "Similarly, Moniepoint and Paga have warned that customer accounts will be closed and details shared with authorities if they engage in crypto or virtual asset transactions.

The Economic and Financial Crimes Commission (EFCC) secured an interim court order on April 24, 2024, to freeze 105 accounts across nine fintechs for 90 days while investigations continue. These frozen accounts are part of a larger EFCC probe into 1,146 bank accounts suspected of manipulating the FX market through cryptocurrency platforms.

Sources familiar with the situation informed BusinessDay that these directives are industry-wide and concern national security. Fintech operators recently met with the Office of the National Security Adviser, who emphasized the national interest behind its actions. The government is taking a hard line on crypto due to concerns that crypto platforms are aiding currency speculation and fueling the rapid devaluation of the naira.

Olayemi Cardoso, governor of the Central Bank of Nigeria, stated that $26 billion flowed through Binance Nigeria in a year from unidentified sources. Tosin Eniolorunda, founder and CEO of Moniepoint, warned, "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." Paga also sent an email to customers stating, "As a Paga account holder, please ensure that your account is not used for crypto and virtual currency transactions. Paga accounts in violation of this regulation will be blocked."

Key Takeaways

• Nigeria tightens grip on crypto transactions, instructing fintechs to report trades to authorities.
• Fintechs OPay, PalmPay, Moniepoint, and Paga warn customers to refrain from crypto trading.
• EFCC freezes 105 accounts across 9 fintechs for 90 days amidst investigation into FX market manipulation.
• Nigerian government cites national security concerns, currency speculations, and naira devaluation.
• Future of crypto trading in Nigeria remains uncertain amidst ongoing investigations and regulatory measures.