Cryptocurrency enthusiasts warn of naira trading ban on exchanges.
Some Nigerian cryptocurrency enthusiasts believe the country’s decision to stop naira trading on cryptocurrency exchanges is likely to worsen the volatile fiat currency’s problems.
Rume Ophi, Stakeholder Secretary of the Blockchain Technology Association of Nigeria (SiBAN), told Cointelegraph that Nigeria’s official explanation that global cryptocurrency platforms contributed to the decline in the value of the naira is unrealistic.
Ophi said Nigeria can effectively regulate the cryptocurrency industry through the framework introduced by the Securities and Exchange Commission (SEC) of Nigeria in 2022.
The sharp decline in the naira and the resulting inflation rate of 29.9%, the highest in nearly 30 years, has prompted the government to focus on platforms that offer cryptocurrency services. These websites have become famous for trading and establishing unofficial values for the Naira.
Iwa Salami, an associate professor at the University of East London, argued in a recent commentary that cryptocurrencies have been unfairly blamed for devaluing national currencies.
She suggested Nigerian authorities adopt a balanced regulatory approach instead of an outright ban, as cryptocurrencies have never been directly linked to currency devaluation despite being linked to money laundering and drug trafficking.
“Nigeria needs a balanced approach to regulation for the industry to thrive without compromising financial and monetary stability. A stable financial system can efficiently allocate resources and manage financial risks. This approach must protect consumers and investors.”
Cryptocurrency exchange targeting regulations
Cointelegraph previously reported on Nigeria’s crackdown on cryptocurrency trading platforms. Nigerian authorities have blamed these platforms for the sharp decline in the value of the naira in early 2024. Nigerian authorities have been closely investigating Binance for several allegations, including tax evasion.
Related: 108 former prosecutors request rescue of Binance executives from Nigeria
Salami emphasized that Nigerian authorities can achieve their goals through regulation rather than prohibition. Leveraging the 2022 regulatory framework established by the Nigerian SEC, authorities can strike a balance between oversight and innovation by requiring cryptocurrency exchanges to disclose the identities of wallet holders involved in suspicious activity.
According to the associate professor, the global adoption of international standards for cryptocurrency assets, such as the Financial Stability Board’s recommendations, would provide a uniform solution to the concerns raised by Nigerian authorities and other regulators around the world, helping to address cryptocurrency asset activity. This will increase clarity and consistency in regulating.
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