Nigerian fintech firms have reportedly begun to tighten scrutiny on crypto traders following a directive from the Central Bank of Nigeria (CBN).
The CBN alleged that a lot of crypto traders in the country were leveraging on several fintech platforms to disrupt the forex market.
This prompted four fintech platforms Kuda, Moniepoint, Opay, and Palmpay to temporarily halt the opening of new accounts for customers.
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In line with this Moniepoint and Paga have further notified their customers that their accounts risk being blocked if they facilitate crypto transactions with it.
In the notification sent to customers on May 2, 2024, Moniepoint wrote,
“In line with CBN regulation, we will close the account of anyone engaging or other virtual assets transactions and share their details with relevant authorities.”
Also, Paga sent a similar message to their customers which reads,
“Pursuant to the CBN circular with reference FPR/DIR/GEN/CIR/06/10, we wish to remind you that dealing in or facilitating transactions in cryptocurrency and other virtual currencies is not permitted.”
One of the fintechs disclosed that the CBN’s directive is linked to the EFCC’s ongoing investigation into bank accounts involved in unauthorized FX dealings. Meanwhile, an analysis of about 1,146 accounts blocked by the EFCC revealed that only 10% are operated by fintechs, with the majority being commercial bank accounts.
The CBN directive on restriction of crypto transactions shows a reversal of the apex bank’s previous announcement to lift its crypto ban imposed in 2021.
Recall that in December 2023, the CBN rolled out a circular mandating financial institutions to open accounts, provide designated settlement accounts and settlement services, and act as channels for forex inflows and trade for firms transacting in crypto assets.
Part of the circular reads,
“However, current trends globally have shown that there is a need to regulate the activities of virtual assets service providers (VASPs) which include cryptocurrencies and crypto assets.”
The directive by the CBN aimed to establish minimum standards and requirements for establishing banking relationships and opening accounts for virtual asset service providers (VASPs) in Nigeria.
However, with the recent reversal of the ban on crypto platforms and transactions, the Nigerian government has expressed concerns about its effects on the devaluation of the Naira, amidst other challenges.
Notably, the Blockchain Industry Coordinating Committee of Nigeria (BICCON) is convening a roundtable on May 6 between the new director general of the Nigerian Securities and Exchange Commission (SEC) and local and international crypto exchanges to discuss and seek consensus on the status of crypto in the country.
The BICCON chair, Lucky Uwakwe, explained that the meeting is open to all digital assets exchange operators, wallet providers, and other virtual asset service providers (VASPs), and relevant industry associations and bodies to address relevant issues and chart a progressive course for crypto regulations in Nigeria.