P2P digital currency ban looming in Nigeria as central bank halts fintech account opening

Getting your Trinity Audio player ready...

It’s a turbulent time for Nigeria’s digital asset sector. Months after the government banned access to leading global exchanges and charged Binance with tax evasion and money laundering charges, the threat of a ban on peer-to-peer digital currency trading looms.

A week ago, the Central Bank of Nigeria (CBN) ordered four leading fintech operators to cease opening new accounts. According to sources cited by a local media outlet, the central bank believes that fintechs have lax KYC procedures and wants them reviewed before they can resume accepting new users.

The ban affected Moniepoint, Kuda Bank, Palmpay, and OPay.

“We’ve temporarily paused new signups on our platform. This means that you’ll be unable to open a new account at the moment. We apologise for any inconvenience this may cause,” one of the fintechs told its users.

Following the ban, CBN and the National Security Agency (NSA) held a meeting with the fintech community, revealing that the ban targets digital currency traders.

“The CBN feels like a lot of crypto traders were leveraging the fintech platforms to disrupt the FX market,” one of the executives who participated in the meeting revealed.

Nigeria started connecting disruptions in the country’s FX market to digital currency earlier this year, with government officials criticizing the digital currency community for allegedly manipulating the forex market. Shortly after, the CBN alleged that Binance had facilitated the trading of $26 billion in a year, whose sources the government couldn’t trace due to the exchange’s notoriously poor KYC measures.

Since then, Binance has been banned, two of its executives have been arrested, and it has been hit with five charges.

Is Nigeria about to ban P2P digital currency?

Days after the fintech operators were ordered to pause account opening, the NSA issued another directive to block digital currency-related accounts and report them to law enforcement agencies.

The directive was tied to the NSA’s classification of digital currency as a national security issue. Some fintechs that have confirmed receipt of the directive include Palmpay, Paga, and Moniepoint.

Moniepoint sent a notice to its users stating, “In line with CBN regulation, we will close the account of anyone engaging in crypto or other virtual assets transactions and share their details with relevant authorities.”

MoniePoint will shut down your account and report you to the authority if you make any attempt to trade cryptocurrencies, NFTs, or other virtual assets via their platform.

My question is simple: Does MoniePoint accept deposit and/or withdrawal of cryptocurrencies, NFTs, etc pic.twitter.com/vmlSL09aGN

— Barry 💶 (@Barryelon) May 3, 2024

Tosin Eniolorunda, the CEO of Moniepoint, confirmed the latest blow, revealing that the NSA “found a lot of accounts [that were involved in crypto trading] and blocked the accounts. They were worried that fintechs are rapid [in opening accounts] and told us to stop onboarding.”

Some users revealed on social media that their accounts had been frozen and were required to pledge to stay away from digital currency to regain access.

The latest directive contradicts the government’s pledge to push digital currency adoption in Nigeria. In his campaign, President Bola Tinubu pledged to regulate digital currency in the West African nation. After taking over last year, he followed through with the central bank reversing its banking ban on digital currency.

However, the latest moves signify a shift from this relaxed approach.

According to Moniepoint’s Eniolorunda, the government is developing new legislation to ban peer-to-peer trading. Other sources with knowledge of the matter confirmed this allegation.

This would be a big blow as Nigeria is Africa’s largest P2P digital currency market. According to the Chainalysis Global Adoption Index, Nigeria was first globally for P2P trading volume last year.

Watch: Tech redefines how things are done—Africa is here for it