Nigeria: Crypto Enthusiasts Warn Against Naira Trade Ban on Exchanges

Amid the rapid decline of the naira and soaring inflation rates, the Nigerian government has shifted its focus to cryptocurrency service platforms. However, many crypto enthusiasts argue that banning naira trading on these exchanges could exacerbate the situation for the already volatile currency.

Rume Ophi, Executive Secretary of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN), dismissed the notion that global cryptocurrency platforms are to blame for the naira’s depreciation. Ophi emphasized that the Nigerian Securities and Exchange Commission (SEC) introduced a regulatory framework in 2022, which could effectively manage the cryptocurrency industry without resorting to a trade ban.

The government’s focus on cryptocurrency platforms comes as the naira plummets and inflation reaches a nearly three-decade high of 29.9%. These platforms have become popular for trading and establishing an informal value for the naira, drawing increased scrutiny.

Iwa Salami, an associate professor at the University of East London, argued in a recent opinion piece that cryptocurrency has been unfairly blamed for devaluing national currencies. Salami suggested that Nigerian authorities adopt a balanced regulatory approach rather than a complete ban, pointing out that cryptocurrency has not been directly linked to currency devaluation despite associations with money laundering and drug trade:

“Nigeria needs a balanced approach to regulation if the industry is to thrive without harming financial and monetary stability. A stable financial system can allocate resources efficiently and manage financial risks. The approach must protect consumers and investors.”

Salami and other experts advocate for regulation over prohibition. They argue that leveraging the 2022 SEC framework, which requires cryptocurrency exchanges to reveal the identities of wallet holders involved in suspicious activities, would strike a balance between oversight and innovation.

Earlier this year, Nigerian authorities cracked down on cryptocurrency trading platforms, blaming them for the naira’s rapid depreciation. Binance, in particular, faced several charges, including tax evasion allegations.

Salami stressed that global adoption of international standards for crypto assets, such as the Financial Stability Board’s recommendations, could provide a unified solution to the concerns raised by Nigerian authorities and regulators worldwide. This would promote clarity and consistency in regulating crypto asset activities, ensuring that the industry can thrive without compromising financial and monetary stability.