Crypto Giggle
Nigeria’s cryptocurrencies regulatory environment is undergoing some significant changes at this time. A roundtable will be held on May 6, by the Blockchain Industry Coordinating Committee of Nigeria. The discussion will focus on the future of regulations in Nigeria. Fintech platforms such as Moniepoint, PalmPay and others have begun warning their users about crypto transactions to comply with the directives of Nigeria’s Central Bank (CBN). Patricia, a Nigerian cryptocurrency exchange also faces rumors that it will be shut down after an incident last year.
The trial in Nigeria of Binance executives Tigran Gamaryan and Nadeem Ajarwalla has now been postponed until later in May. This only increases the difficulty of the crypto regulatory environment in Nigeria.
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Nigeria will host a major crypto regulation dialogue
On May 6, the Blockchain Industry Coordinating Committee of Nigeria will host an important roundtable with Dr. Emomotimi gama, the recently appointed Director General of Securities Exchange Commission. The meeting will attempt to reach a consensus regarding the regulation of cryptocurrency in Nigeria.
Lucky Uwakwe announced the meeting would include exchange operators and wallet providers as well as other virtual assets service providers. This includes various industry associations such the Blockchain Nigeria User Group, Cryptographic Development Initiative in Nigeria, Digital Currency Consortium, Digital Currency Consortium, and the Stakeholders in Blockchain Technology Association of Nigeria.
This gathering was organized by Dr. Agama in an attempt to address some of the challenges and opportunities that exist within the Blockchain and Cryptocurrency sectors. The meeting is taking place at an important time in Nigeria, as it appears that the country has a hesitant stance on cryptocurrencies. The Nigerian government, despite lifting the previous ban on December 2023 has now scrutinized cryptocurrency usage and limited access to exchange websites via local telecommunications providers.
The Nigerian SEC has also suggested increasing the registration fees for cryptocurrency exchanges, from 30 million Naira (18,620 dollars) to 150 millions naira (933,000 dollars). This suggestion has sparked debates within the crypto industry. The critics argue that the increase in capital requirements and the new 500 million Naira paid-up requirement could negatively affect local companies.
Uwakwe hopes that the roundtable can lead to changes and regulatory advances that will be beneficial for all parties and will encourage innovation in crypto.
What is Regulatory Reversal?
Following directives by the Central Bank of Nigeria, some Nigerian fintech companies, such as Moniepoint and PalmPay, have recently warned their clients against using their account for cryptocurrency transactions. The CBN had ordered that some banks including Moniepoint stop accepting new customers.
Moniepoint informed customers in May 2024 that any accounts associated with crypto-transactions would be shut down and their details would be passed to authorities.
The CBN’s circular of December 2023 lifted the restrictions that had been imposed on financial institutions in 2021. These earlier regulations prohibited them from providing services to cryptocurrency businesses. In the 2023 circular, banks were allowed to open cryptocurrency business accounts and offer services. This was a major change from previous directives issued in 2017 and 2021. Fintech companies’ recent moves could indicate a shift in mentality.
These fintech platforms are already causing some problems for their users. PalmPay customers have reported, for example that their accounts were frozen. They could only unfreeze them if they signed an agreement that would stop all crypto transactions. Paga, in an email sent to customers, also reiterated its compliance with CBN guidelines, referring to the circular of 2017 that cautioned financial institutions against engaging with cryptocurrency exchanges.
CBN’s mixed message is causing confusion among Nigerians. Many customers and business are waiting on clear, consistent and unbiased guidelines to be issued by regulatory agencies regarding the handling of cryptocurrencies in Nigeria.
Nigerian Exchange Fights Closure Speculation
Fejiro Hanu has vehemently refuted rumors that speculated about the closure of the Nigerian crypto-exchange Patricia. Hanu dismissed these remarks and described them as sensationalism meant to increase clicks. Patricia continues to operate normally, according to the CEO.
After a major hacking attack in 2023 that compromised a significant amount of funds belonging to customers, the controversy surrounding Patricia began to grow. Patricia assured customers their money was safe, but many have had difficulty accessing it. It was then that rumors spread of a possible exit scam.
Patricia, in an effort to stabilize things, introduced in October 2023 a new strategy to convert customers’ assets into Patricia Tokens. The equivalent in USDT (a stablecoin tied to the US Dollar) will be reimbursed. PTK, according to the exchange is a token that represents the debt due to customers. It is not traded externally on blockchain platforms.
Hanu believes that the media has distorted his words to create a dramatic story.
In November 2023, the Nigerian Police Force detained politician Wilfred Bonne, a man they linked to Patricia’s theft of her crypto wallet. Bonse faces charges of criminal conspiracy and unauthorized data modification, as well as illicit fund diversion.
Nigeria: Trial delayed
After another delay, the trial of Tigran Gamaryan, an executive from Binance who is currently detained in Nigeria has been delayed until 17 May. Binance’s Legal team did not receive the documents necessary for an investigation into money laundering involving Gambaryan, Binance Regional Manager Nadeem Anjarwalla and Binance. The court adjourned in order to give the defense time to review the documents.
Gambaryan, as well as Anjarwalla who traveled to Nigeria to investigate allegations made by Binance of currency manipulation, were both charged with money laundering and tax evasion. Anjarwalla fled to Kenya, but was arrested later. Anjarwalla’s extradition is underway.
All parties involved have denied the charges. Binance is also facing separate charges of tax evasion by Nigeria’s Economic and Financial Crimes Commission. Many have questioned the timing of this charge, as it was made at the same time that Binance announced to cease all transactions using Nigerian Naira. Binance attempted to defend Gambaryan, stating that he has no power of decision in the company.
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