More than $50 billion could be tied up in crypto exchanges as FG begins to clamp down | The Guardian Nigeria News

•Stopping naira trading on P2P platforms

The Federal Government, through the Securities and Exchange Commission (SEC), plans to halt naira trading on all virtual peer-to-peer (P2P) platforms to hedge the currency against manipulation.

If the plan were successful, it would close the door on cryptocurrency trading to new entrants, leaving existing investments estimated at more than $50 billion tied up on various exchanges.

But traders see the measure merely as an official statement that is practically unenforceable.

This is not the first time that the government has taken action against crypto platforms. The latest case involving Binance has only fueled the adoption of offerings from rival virtual asset custodians, where millions of young people are now trading usdt (the leading stablecoin used to buy other cryptocurrencies) for naira.

The Director General of the SEC, Emomotimi Agama, announced the latest move yesterday during an interactive session with the Nigerian blockchain industry. This is expected to be part of a number of regulations to be introduced in the coming days to curb the reckless manipulation of naira using virtual currencies.

Agama said: “That is one of the things that needs to be done to save this space. The removal of the naira from the P2P platforms is intended to avoid the level of manipulation currently taking place. I want your cooperation in dealing with this as we roll out regulations in the coming days.”

Agama, who made efforts to reassure ecosystem stakeholders at the meeting, stated that SEC was ready to work with anyone in the room. He noted that the commission is updating its guidelines in hopes of ensuring best practices.

The SEC DG decried how some market players manipulated the value of the naira, explaining that this is why the commission “seeks cooperation and assistance to ensure that the crypto environment is respected globally.”

Agama’s statement follows a recent directive from the Central Bank of Nigeria (CBN) requiring fintechs to warn their customers before engaging in crypto transactions.

The SEC’s regulations will take a hard look at the cryptocurrency ecosystem ranging from wallet providers, digital asset managers and fund managers, cryptocurrency crowdfunding, initial coin offerings (ICOs), security token offerings (STOs), among others to ensure ensuring that every Nigerian playing in the ecosystem is included, supported and well catered for.

According to Agama, the proposed regulatory guideline is currently being refined with suggestions from various stakeholders.

The SEC boss said the recent concerns over crypto P2P traders and their perceived impact on the Naira exchange rate has underlined the need for collective action and dialogue within the financial market ecosystem.

“We ask that those involved in abusive practices that undermine the national interest desist. It is in our interest as a people to protect what belongs to us. We encourage you to reach out to us by naming and shaming the bad actors. Together, I am confident that we can root out bad actors and unleash the immense potential of this cutting-edge technology for the benefit of all Nigerians, coupled with this administration’s renewed hope agenda,” he added.

Stating that the SEC Nigeria will not hesitate to use all powers within its mandate to address issues that are negative and pose a threat to the national interest, Agama said the Commission has come as a partner to seek cooperation to ensure ensure that the capital markets community is respected worldwide for decency and fair play.

“I am ready for an innovative regulatory regime for digital assets that will support Nigeria as Africa’s Digital Asset Powerhouse with diverse solutions such as Real World Asset Tokenization (RWA) that will drive prosperity and catalyze our capital market. We must explore innovative solutions to this problem and find the right balance between encouraging innovation and safeguarding our national economic interests. We will do this in a friendly and firm manner, so that we can achieve the desired result.”

Consider that the P2P subsector has proven to be subject to various forms of manipulation, creating cracks in the ecosystem.

The Economic and Financial Crimes Commission (EFCC) obtained an interim court order on April 24, 2024 to freeze these accounts for 90 days while investigations continue.

Following these freezes, several fintechs, including OPay, Moniepoint, PalmPay and Kuda Bank, were asked to temporarily suspend the opening of new accounts pending the Central Bank of Nigeria’s review of its Know Your Customer process.

Recall that in 2021, the CBN had restricted banks and other financial institutions from managing accounts for cryptocurrency service providers.

However, in December 2023, the financial regulator lifted the ban and announced a policy reversal.

In February, new concerns emerged over the activities of the world’s largest cryptocurrency exchange, Binance, on its peer-to-peer platform, such as implementing a price cap on USDT trading.

Authorities said these activities contributed to the devaluation of the naira and destabilized the Nigerian economy.

Research by invezz.com, which predicted a promising future for cryptocurrency in Nigeria, already found that crypto ownership among Nigerians would reach 46 percent by 2023.

According to the report, 90 percent of Nigerians are planning future investments in cryptocurrency, the highest in the world.

It showed that Nigeria ranked second globally in crypto adoption in 2023 and first globally in P2P cryptocurrency transactions last year.

According to the report, Bitcoin’s adoption rate stands at 76 percent among Nigerian crypto investors and crypto adoption in Nigeria has increased by 15 percent between 2020 and 2023.

The survey found that Nigeria has the highest level of cryptocurrency awareness globally at 99 percent.

It revealed that there is no gender gap in cryptocurrency adoption in Nigeria, with a 50-50 split between male and female investors.

Invezz.com said most Nigerians want to use crypto profits to start a business (40 percent) and improve the lives of their families (40 percent).

According to the report, volatility in the cryptocurrency market is the biggest barrier to cryptocurrency adoption in Nigeria.