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Nigeria Prepares P2P Bitcoin Ban, Cites 'National Security Risk'

Nigeria Prepares P2P Bitcoin Ban, Cites 'National Security Risk'

May 3, 2024

Nigeria Prepares P2P Bitcoin Ban, Cites 'National Security Risk'

At least three Nigerian startups—Moniepoint, Paga, and Palmpay—have been mandated to block the accounts of customers who engage in Bitcoin trading. This decision comes after Nigeria’s National Security Adviser (NSA) labeled Bitcoin trading a national security concern.

The CEO of Moniepoint, Tosin Eniolorunda, disclosed that a new regulation is anticipated, which would prohibit peer-to-peer (p2p) trading of Bitcoin.

This potential ban marks a significant policy reversal from the Bola Tinubu administration, which had previously eased restrictions. In December 2023, the Central Bank of Nigeria (CBN) lifted a two-year ban on Bitcoin transactions, and negotiations for "crypto licenses" were underway between at least three exchanges and the Securities and Exchange Commission (SEC).

However, the situation has deteriorated, with authorities, in the past two months, attributing the instability of the foreign exchange regime to "crypto speculators."

The CBN believes that traders use p2p trading to manipulate the Nigerian naira through a pump-and-dump schemes. In February 2024, CBN Governor, Olayemi Cardoso, alleged that Binance processed $26 billion in transactions that could not be traced.

Following these assertions, there was a concerted effort against Binance which resulted in the freezing of over 1,000 bank accounts associated with p2p transactions. The regulatory measures have escalated since.

TechCabal reported last week the directive given to four prominent startups to halt the creation of new customer accounts, although it was initially unclear whether this directive was issued by the Economic and Financial Crimes Commission or the NSA. A spokesperson for the NSA later denied any involvement with the directive.

Subsequently, at the TMT Business Law conference in Lagos, Tosin Eniolorunda confirmed that the NSA ordered the suspension of new customer signups. He highlighted the concern of the NSA regarding the rapidity with which platforms could open Tier 3 accounts, which were then used for trading.

A spokesperson for the NSA has since declined to comment on the issue.

The ease of opening these accounts, which was part of a drive to increase financial inclusion, has been under intense scrutiny over the last year. Traditional banks have suggested that these accounts are often used illegally by bad actors.

In response, the Central Bank amended its rules in December 2023. It has given startups until March 2024 to implement identification requirements for all classes of accounts.

Techcabal Article


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