Nigeria’s National Security Advisor (NSA) plans to label crypto trading as a threat to national security, signaling an impending crackdown on peer-to-peer (P2P) crypto transactions, according to local media reports and CryptoSlate sources.
The move follows the decision by at least three major Nigerian fintech startups – Moniepoint, Paga and Palmpay – to block accounts involved in crypto transactions and report such activities to law enforcement.
According to Tosin Eniolorunda, CEO of Moniepoint, the NSA’s classification is expected to pave the way for new regulations banning P2P crypto trading, and an official announcement is expected soon.
This represents a notable shift in regulation, especially after the Bola Tinubu administration previously showed a softer stance towards crypto. In December 2023, the Central Bank of Nigeria even lifted a two-year ban on crypto transactions, signaling a more hospitable regulatory environment.
However, in recent months there has been a reversal of this trend, with authorities blaming crypto speculators for exacerbating foreign exchange (FX) market volatility. The proposed ban on P2P trading is based on the Central Bank’s claim that crypto traders are abusing this method to manipulate the Nigerian naira through pump-and-dump schemes.
Central Bank Governor Olayemi Cardoso alleged in February 2024 that Binance had facilitated $26 billion in untraceable transactions, leading to a crackdown on the exchange and the freezing of more than 1,000 bank accounts linked to P2P transactions .
In a related development, four leading fintech companies were recently ordered to halt opening new customer accounts, although the source of this directive remains unclear.
Moniepoint CEO Tosin Eniolorunda confirmed that the move was at the behest of the NSA, which raised concerns about the ease with which fintech platforms facilitate account opening, especially Tier 3 accounts.
Although an NSA spokesperson declined to provide further details, this development highlights increasing scrutiny of the rapid spread of accounts facilitated by fintech startups. Traditional banks have long been concerned that such accounts serve as conduits for illicit funds.
In response to these concerns, the Central Bank changed its rules in December 2023, ordering fintech startups to verify the identity of all account holders by March 2024.
As Nigeria braces for further regulatory action in the crypto space, the fate of P2P trading remains uncertain amid rising national security concerns and changing regulatory landscapes.