Evolving Cryptocurrency Regulation in Nigeria: A Critical Need

Intensifying calls for cryptocurrency regulation in Nigeria have highlighted the urgent need to address financial crime, particularly money laundering, in the burgeoning digital currency sector. Adedeji Owonibi, co-founder of A&D Forensics, has been at the forefront of this advocacy, emphasizing the role of regulation in curbing these illegal activities. His insights highlight the complexities and challenges of cryptocurrency trading and highlight the need for government intervention through regulation.

Owonibi’s position on this issue is clear. In the absence of strict regulation, Nigeria’s cryptocurrency sector remains a fertile environment for financial misconduct. He argues that the Nigerian government should enact comprehensive laws governing cryptocurrency activities to curb and mitigate the risks of money laundering and other financial crimes. This view is particularly relevant as the Central Bank of Nigeria (CBN) lifted its ban on cryptocurrency trading, allowing banks to operate accounts with virtual asset service providers (VASPs).​​​​

The importance of these regulations cannot be overemphasized, especially considering Nigeria’s position as a key player in the global cryptocurrency market. Cryptocurrency usage in Nigeria has seen a notable surge despite previous regulatory challenges, including a ban by the CBN. The country ranks prominently in the global cryptocurrency adoption index due to factors such as limited access to traditional banking services, currency depreciation, and inflation. However, this increase in cryptocurrency activity has raised concerns about an increase in financial crime, making calls for regulation more important.

Owonibi’s insight also suggests that regulatory frameworks will strengthen security and scalability of the cryptocurrency industry. He points out that the development regulations established by the National Information Technology Development Agency (NITDA) are an important step toward creating a favorable environment for the growth of the blockchain and cryptocurrency industry. According to Owonibi, this move is something the CBN should have considered in 2021 instead of cutting ties between cryptocurrency exchanges and local banks.

Additionally, Owonibi takes a closer look at the complex process of tracking and investigating cryptocurrency fraud, finding that while OTC (over-the-counter) trading and cryptocurrency mixing pose challenges for law enforcement, advances in regulatory technology and international cooperation are helping to combat illicit activities. It revealed that tracking capabilities are improving. . He highlights the evolving landscape of blockchain anonymity and global efforts to establish standards for transaction traceability, emphasizing the importance of regulatory action to combat cryptocurrency fraud.​​

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