Crypto Ban on Nigerian Exchanges Raises Concerns

Nigerian Crypto Community Pushes Back Against Naira Trade Ban

Nigeria’s recent decision to ban the use of naira (NGN) for trading cryptocurrency on exchanges has sparked concerns within the country’s crypto community. Enthusiasts argue that the move may not achieve its intended goals and could even worsen the situation for the naira.

Rume Ophi, executive secretary of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN), spoke to Cointelegraph, challenging the official narrative. He believes blaming global cryptocurrency platforms for the depreciation of the naira is a simplistic explanation.

Ophi suggests that Nigeria already has a regulatory framework in place – introduced by the Nigerian Securities and Exchange Commission (SEC) in 2022 – that could be effectively utilized to manage the crypto industry.

The Nigerian government’s focus on crypto exchanges stems from the rapid decline of the naira and the high inflation rate, currently hovering around 29.9%, a nearly three-decade high. Nigerians have increasingly turned to cryptocurrency platforms for trading and establishing an alternative valuation for the naira.

Professor Argues for Balanced Regulation

In a recent opinion piece, Iwa Salami, an associate professor at the University of East London, argues against the complete ban on crypto trading. She highlights the lack of direct evidence linking cryptocurrencies to currency devaluation, despite concerns regarding money laundering and illegal activities.

Professor Salami suggests a more balanced approach: “Nigeria needs a regulatory framework that allows the industry to flourish without compromising financial stability. This should prioritize consumer and investor protection while ensuring efficient resource allocation and risk management.”

Cointelegraph previously reported on the Nigerian government’s crackdown on cryptocurrency trading platforms, which they believe contribute to the naira’s depreciation. Binance, a major exchange, faced scrutiny from authorities and accusations of tax evasion.

Professor Salami emphasizes that regulation, not prohibition, is the key to achieving the government’s goals. The existing 2022 SEC framework can be leveraged to require cryptocurrency exchanges to identify users involved in suspicious activities. This approach would strike a balance between oversight and fostering innovation in the crypto sector.

Finally, she proposes adopting international standards for crypto assets, such as those recommended by the Financial Stability Board. This would provide a unified global approach to regulating cryptocurrency activities, promoting clarity and consistency for regulators worldwide.