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Nigerian fintech startups that provide online-only banking services have warned customers that trading cryptocurrency will lead to account closures and being reported to law enforcement authorities.
Moniepoint, a Lagos-based startup whose digital banking operation is one of the largest in Nigeria, told customers on Monday that it would close crypto trading accounts in compliance with regulations by the Central Bank of Nigeria (CBN). “We will close the accounts of anyone engaging in such transactions without recourse,” the company said.
OPay, the Chinese-backed digital banking provider that is one of Africa’s most valuable startups, sent a similarly worded warning to customers.
Nigeria’s Securities and Exchange Commission held a meeting with local crypto exchanges on Monday to express “concerns regarding crypto peer-to-peer traders and their effect on the naira,” said the commission’s director-general Emomotimi Agama. Nigeria wants the naira currency to be delisted from trading platforms and crypto exchanges’ compliance with regulation that will be released “in the coming days,” he said.
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Moniepoint and OPay’s moves mark the latest episode in Nigeria’s clampdown on peer-to-peer crypto trading, in an apparent push to stabilize the naira that has weakened significantly since President Bola Tinubu took office a year ago. Nigerian officials have blamed crypto exchanges for encouraging inflated demand for the dollar against the naira.
With peer-to-peer trading, individuals negotiate transactions on crypto exchanges but use bank accounts to make payments. But a clampdown on the feature has seen Nigerian authorities face off with Binance in particular. The company’s trading app and website are not accessible in Nigeria and law enforcement agents arrested two of its executives who visited Nigeria in February. One of them has escaped while the other, a former US tax agent Tigran Gambaryan who leads Binance’s financial compliance division, remains detained in Nigeria. He is facing charges including tax evasion and money laundering, with a court hearing slated for later this month.
In December, the CBN had seemed poised to welcome crypto trading. It lifted a 2021 ban imposed by the bank’s past leadership and indicated it would issue licenses for trading virtual assets. But no licenses have been issued yet, with a ban of some sort looking more likely instead.
Banks and fintechs may yet find it challenging to spot peer-to-peer crypto trades, since people who trade crypto are careful to not disclose the nature of their transactions. But “our work is to monitor suspicious transactions and report them to law enforcement,” Didi Uwemakpan, a spokesperson for Moniepoint, told Semafor Africa.
Notable
- Before his February visit and arrest, Gambaryan received a message in January that Binance should pay roughly $150 million in crypto, which he “understood as a request for a bribe from someone in the Nigerian government,” the New York Times reported today.