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Stakeholders in Nigeria’s cryptocurrency sector argue that the Central Bank of Nigeria’s previous decision to exclude cryptocurrency entities from the banking ecosystem has fueled the growth of peer-to-peer crypto trading. Nigerian authorities are reportedly seeking to ban peer-to-peer crypto trading. One stakeholder has urged participants in the Nigerian crypto space to ‘identify the bad actors and inform the government.
CBN’s Role in Steering Users Toward P2P Platforms
According to stakeholders in Nigeria’s blockchain and cryptocurrency sector, the Central Bank of Nigeria’s (CBN) previous decision to exclude cryptocurrency entities from the banking system contributed to the growth of peer-to-peer (P2P) cryptocurrency trading. Stakeholders argue that the CBN’s lack of understanding and refusal to acknowledge the cryptocurrency industry allowed malicious actors to exploit P2P platforms for their purposes.
The CBN’s ban or directive on Feb. 5, 2021, while successful in stifling the operations of centralized exchanges, inadvertently boosted the volumes of P2P cryptocurrency platforms. The surge in P2P cryptocurrency trading however soon became a concern for various entities, including a money changers association.
However, it was not until early 2024 that Nigerian authorities began to take action against P2P crypto trading platforms. Initially, authorities pressured exchanges to impose a cap on the USDT-to-naira exchange rate. Subsequently, Nigerian authorities instructed Binance to delist the naira.
Still, some in the Nigerian government have argued that currency manipulators could have migrated to P2P platforms that have yet to delist the naira. This concern reportedly led Nigerian authorities to consider delisting the naira from all platforms. The recent confirmation by the Nigerian Securities and Exchange Commission that it will request P2P platforms to delist the naira has sparked concerns that such a decision could potentially cripple legitimate businesses.
Central Bank Clueless
Commenting on naira delisting and the possible ban on P2P crypto trading, Adedeji Owonibi, the co-founder of the blockchain solutions company Convexity, blamed the CBN for opening up peer-to-peer trading to bad actors. Despite this, he is quoted in the Nairametrics report, sharing his thoughts on how legitimate participants can assist the government in identifying these bad actors.
“Now, we have a lot of bad actors that are giving everybody a bad name. The industry players operating legitimately will need to expose the bad actors and let the government know them,” Owonibi said.
However, some believe the Central Bank of Nigeria (CBN)’s failure to acknowledge the efforts of P2P crypto trading platforms in excluding bad actors may explain why the central bank has been unrelenting in its fight against crypto entities. Chuta Chimezie, the founder of the Blockchain Nigeria User Group (BNUG), expressed his disappointment over the CBN’s lack of understanding of the operations within the crypto industry. He explained:
Every exchange that I know that does P2P transactions does 100% KYC and they comply maximally [with] all the standards that the financial reporting standards outline for them to operate. But the problem here is that the industry is still like a ghost to the central bank.
Regarding the possibility of the SEC completely banning P2P crypto trading, the founder of BNUG argued that this might not be a sustainable solution, as traders will invariably find an alternative method.