By
Bena Ilyas
May 17th, 2024
This new development comes at a time when Nigeria is slamming the digital asset market for impacting negatively on the naira.
Local news outlet The Guardian says Nigeria is taking a step to ban Peer-to-Peer (P2P) trading of cryptocurrencies in Naira (NGN), the native fiat currency of the West African country. Specifically, the Securities and Exchange Commission (SEC) in the region has identified reasons to delist the naira from cryptocurrency P2P platforms.
P2P Trading Ban: Key Reasons
During a virtual meeting with blockchain stakeholders and fintech professionals on Monday, the Commission’s Director General Emomotimi Agama stated that the new rule will be rolled out soon. This potential legislation will affect crypto exchanges, digital asset custodians, and other entities in the crypto asset landscape.
Ordinarily, P2P platforms make it possible for crypto investors to perform direct trading with one another. It takes away the need for a centralized intermediary, making it easier for traders to directly negotiate their prices.
“The thing that needs to be done is delisting the naira from the P2P space in order to avoid the level of manipulation that is currently happening,” Agama explained. “Recent concerns regarding crypto P2P traders and their perceived impact on the exchange rate of the naira has underscored the need for collective action,” he added.
This new development comes at a time when Nigeria is slamming the digital asset market for impacting negatively on the naira. Ever since the Nigerian government eased currency rules in June 2023 to make the fiat more attractive to foreign investors, the NGN has lost over 65% of its value against the US dollar.
Several Nigerians have turned to crypto as a hedge in the face of the economic meltdown caused by the devaluation of the naira. This pivot to crypto is worrisome for the country, in addition to concerns about illicit activities on these digital asset platforms. Due to this sentiment, crypto exchanges have been placed under intense regulatory scrutiny
Binance Caught in Regulatory Strain in Nigeria
Top digital asset service provider Binance was recently implicated in this matter. Two months ago, Binance made the decision to suspend all services involving the local fiat currency, the Nigerian naira. Hence, withdrawals in NGN were suspended after March 8, and users’ remaining NGN balances were automatically converted to the Tether (USDT) stablecoin.
The suspension of its activities came a few weeks after two of Binance executives Nadeem Anjarwalla and Tigran Gambaryan were arrested and detained for tax evasion among other criminal offences as noted by the authorities. Anjarwalla, managed to escape police custody after he was granted a prayer request. It was later discovered that he escaped to Kenya using his Kenyan passport since his British passport remains in custody.
Since then, the Nigerian government has been working with the international criminal police organization (INTERPOL) to extradite Anjarwalla from Kenya. Additionally, the government is asking for a fine of about $10 billion from Binance, even higher than the $4.3 billion levied on it by the United States Department of Justice (DOJ) last year.