Issues surrounding access to cryptocurrencies raise questions about Nigeria’s regulatory intentions

In a recent appeal to the Nigerian government, Nathaniel Luz, co-founder and chief marketing officer of Flincap, a local crypto-over-the-counter (OTC) exchange, has emphasized the need for the government to clarify its stance on the crypto sector.

The call comes amid confusion among local crypto users who are reporting that they cannot access websites of several crypto exchanges, including Binance and OctaFX, through traditional telecom providers. This issue, which came to light on February 21, has led to speculation about a possible government measure against crypto platforms.

Concerns expressed

Luz expressed concern over the Nigerian government’s apparent indifference towards the crypto community. He pointed out that the government is blaming OTC traders for the current exchange rate problems of the Nigerian naira, which currently stands at 1,800 naira for $1. The government claims that trading Tether for naira on the peer-to-peer (P2P) market contributes to these exchange rate issues.

According to Luz, it is unfair to blame OTC traders for the depreciation of the naira. He states that the economic problems and the devaluation of the naira are not directly linked to the activities of the crypto industry. He emphasizes that the problem surrounding the naira arises from various factors such as an abundance of naira in circulation, a shortage of US dollars, a high dependence on imports, emigration and uncertainty about Eurobond payments, and not from the trading activities within the crypto sector .

Crypto ban has recently been lifted

In December 2023, the Nigerian government lifted a 2021 ban on crypto imposed by the country’s Securities and Exchange Commission and the Central Bank of Nigeria. This made it possible for crypto exchanges to apply for licenses within Nigeria. Despite this, many crypto startups still struggle to meet the requirements for a license, which include a capital deposit of 500 million naira ($340,000) and an application fee of 30 million naira ($20,000).

Luz suggests that the Nigerian government would be better off focusing on improving licensing procedures for local exchanges rather than blaming the crypto sector for the currency problems. Nigeria is currently known as the largest P2P market in the world, a status it achieved after the Central Bank of Nigeria banned financial institutions from trading in crypto in 2021.