The International Monetary Fund has recommended that global cryptocurrency trading platforms should be registered or licensed in Nigeria and subject to regulatory requirements.
The Body made this recommendation, in the latest staff country report for Nigeria, warning that the rapid growth of foreign exchange (FX) trading platforms in Nigeria poses new challenges to the country’s financial stability.
The IMF also noted that Nigerian authorities took significant steps at the end of February to address issues surrounding cryptocurrency trading platforms.
The report read: “Staff recommends that global crypto trading platforms be registered or licensed in Nigeria and subject to the same regulatory requirements applicable to financial intermediaries following the principle of same activity, same risk, and same regulation.”
The IMF also urged Nigerian authorities to strengthen anti-money laundering and combating the financing of terrorism (AML/CFT) preventive controls on crypto trading platforms.
It emphasized the need for effective risk-based supervision of these platforms and other virtual asset service providers.
During discussions with the IMF team, the Nigerian authorities noted the need to stabilize the FX market through critical reforms.
Acknowledging mounting pressure on the exchange rate due to illicit flows via crypto platforms, the authorities highlighted the significance of maintaining external stability.
They pointed out that recent reforms and efforts to attract FX liquidity, including a mandate requiring international oil companies to hold 50% of repatriated oil receipts in Nigeria for 90 days, were designed to achieve this goal.
The Nigerian government admitted that illicit flows through cryptocurrency platforms are exerting undue pressure on the exchange rate.
Consequently, the authorities have moved to implement stricter controls on crypto platforms and reinforce compliance with existing FX regulations.
The report read: “The authorities agreed with the importance of maintaining external stability and emphasized that the reforms which they have implemented as well as efforts to bring in FX liquidity—including the requirement for international oil companies to hold 50 percent of repatriated oil receipts in Nigeria for 90 days—are geared towards that end. They see pressure on the exchange rate now coming from illicit flows, including through crypto asset platforms, and not being driven by fundamentals, noting that some ceilings on FX access are intended to curb abuse.”
For instance, South Africa was reported to lead the way in cryptocurrency regulation by licensing approximately 60 digital-asset platforms, positioning itself as one of the first nations on the continent to mandate permits for crypto exchanges.
With Nigeria accounting for about 66.8% of the Africa’s cryptocurrency interest, the Office of the National Security Adviser (ONSA) classified cryptocurrency trading as a national security issue.
Also, the Central Bank of Nigeria (CBN) directed four fintech startups operating in the country—Opay, Moniepoint, Paga, and Palmpay—to block the accounts of customers engaging in cryptocurrency transactions and to report those transactions to law enforcement agencies.
Earlier in February this year, crypto trading platform, Binance, had to disable its peer-to-peer feature for Nigerian users as it came under the searchlight of the Nigerian government over allegations of currency manipulation and money laundering.
Meanwhile, the Nigerian Securities and Exchange Commission (SEC), during a virtual meeting with the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), called for a new cryptocurrency measure that aims to remove the naira a currency pair from cryptocurrency peer-to-peer platforms.
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