The Nigerian crypto market is experiencing strong fluctuations due to growing regulatory measures and legal cases. The apprehension of Binance’s Head of Financial Compliance, Tigran Gambaryan, in February 2024 has unveiled the rising challenges for crypto operations in the country. Despite being innocent of any wrongdoing, Gambaryan is being detained, and this has served to provoke diplomatic rage between the U. S and Nigeria. U.S. officials and lawmakers have criticized the sensitization of citizens and other prisoners on his deteriorating health in custody.
Reports further revealed that Nigeria’s current trend shows institutional proliferation and contradiction in its policies. Over the last two and a half years, the CBN has implemented a relatively conservative monetary policy; for instance, it has prohibited the use of cryptocurrencies and the closure of accounts related to cryptocurrencies.
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International cryptocurrency exchanges are experiencing the impact of Nigeria’s regulatory climate. OKX, the world’s second-largest cryptocurrency exchange, has announced its exit from the Nigerian market owing to regulatory uncertainty. Similarly, KuCoin levied a significant value-added tax on Nigerian customers, citing “changing local laws.” These developments are part of a larger trend of multinational exchanges reassessing their position in Nigeria in the face of regulatory uncertainty.
Also, the Nigerian government’s actions have primarily responded to the growing use of cryptocurrencies. Bitcoin usage in Nigeria was banned in February 2021, and later, the e-Naira was launched in the same year by the CBN with the rationale of stabilizing the currency and fighting inflation. Nevertheless, the uptake of the e-Naira has been poor, and the emergence of P2P crypto markets demonstrates the divergence between policymakers’ objectives and practices on the ground.
Effect on Fintech and Cryptocurrencies Payments
The situation has been further exacerbated by a crackdown on fintech companies involved in cryptocurrency transactions. Some have been asked to stop operations, including Opay and Moniepoint, and have been told to suspend accounts belonging to crypto traders. Hence, many trading activities are shifting out of regulated platforms, and therefore, the risks are rising while controls are narrowing.
However, despite all these, Nigeria has not relinquished its support of blockchain technology. Blockchain technology is at its implementation stage in the country. The policy aimed at its introduction was launched in May 2023 as the National Blockchain Policy. It was designed to make the most of the potential in combination with the preparation for further regulation. However, it is still unclear how useful this policy is as many mixed signals are still coming from the regulatory side.
Conclusion
In conclusion, Nigeria’s cryptocurrency market is going through a difficult moment, highlighted by heightened regulatory scrutiny and high-profile litigation concerns. The arrest of Tigran Gambaryan, Binance’s Head of Financial Compliance, has heightened international tensions and highlighted the complicated regulatory landscape. Meanwhile, the Central Bank of Nigeria and the Securities and Exchange Commission have adopted opposing positions, resulting in an unstable environment for the business. International cryptocurrency exchanges are reconsidering their business in Nigeria, while fintech companies face constraints that force transactions to less regulated platforms. Despite these challenges, Nigeria’s commitment to blockchain technology is clear, albeit the impact of recent regulations is yet to be established.
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