Key Insights:
- Adedeji Owonibi, Co-founder of A&D Forensics, emphasizes the need for Nigeria to regulate cryptocurrency activities to curb financial crimes like money laundering.
- The Central Bank of Nigeria (CBN) recently lifted a ban on transacting in cryptocurrencies but emphasized the necessity of regulating virtual asset service providers (VASPs).
- Despite the ban, Nigeria has seen a surge in cryptocurrency adoption, particularly among its youth population, with peer-to-peer trading becoming popular.
- The volume of crypto transactions in Nigeria grew by 9% year over year to $56.7 billion between July 2022 and June 2023, indicating significant crypto activity in the country.
- The Securities and Exchange Commission, Nigeria, has refrained from incorporating crypto into its digital asset trading goals until regulatory standards ensuring investor safety are established.
Detailed Overview:
Adedeji Owonibi, Co-founder of A&D Forensics, a blockchain intelligence service provider, recently highlighted the imperative for the Nigerian government to regulate cryptocurrency activities within the country. Speaking at a training session for cryptocurrency compliance specialists, Owonibi underscored the inherent risks posed by the lack of regulations in Nigeria’s crypto space, allowing various practices to remain unmonitored. He emphasized that without specific laws in place, there can be no effective oversight or accountability for cryptocurrency-related offenses, particularly concerning financial crimes such as money laundering.
The Central Bank of Nigeria (CBN) recently made significant strides by lifting its ban on transacting in cryptocurrencies. However, this move was accompanied by a call for the regulation of virtual asset service providers (VASPs), including cryptocurrencies and crypto assets. The CBN’s circular issued on December 22 outlined guidelines for banks and financial institutions regarding the opening of accounts, settlement services, and acting as channels for foreign exchange inflows for firms transacting in crypto assets. Despite the relaxation of the ban, banks are still prohibited from trading, holding, or transacting cryptocurrencies directly.
Nigeria has experienced a notable uptick in cryptocurrency adoption, particularly among its young and tech-savvy population. Peer-to-peer trading via crypto exchanges has become a popular alternative to traditional financial services. The volume of crypto transactions in Nigeria saw a significant increase, reaching $56.7 billion between July 2022 and June 2023, indicating a thriving crypto ecosystem despite regulatory challenges.
The Securities and Exchange Commission, Nigeria, has also weighed in on the cryptocurrency landscape. While refraining from integrating crypto into its digital asset trading goals until regulatory standards ensuring investor safety are established, the commission aims to promote investment in “sensible digital assets” with adequate investment protection. Additionally, it is exploring blockchain technology to drive virtual and traditional investment products.
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