Some Nigerian crypto enthusiasts believe that the country’s decision to halt naira trading on cryptocurrency exchanges will likely worsen matters for the volatile fiat currency.
In an interview with Cointelegraph, Rume Ophi, the executive secretary of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN), stated that the official Nigerian narrative that global cryptocurrency platforms contributed to the naira’s depreciation is impractical.
Ophi said Nigeria can effectively regulate the cryptocurrency industry through a framework introduced by the Nigerian Securities and Exchange Commission (SEC) in 2022.
Due to the rapid decline of the naira and the resulting almost three-decade-high inflation rate of 29.9%, the government has turned its focus to platforms providing cryptocurrency services. These websites have become famous for trading and establishing an informal value for the naira.
In a recent opinion piece, Iwa Salami, an associate professor at the University of East London, argued that crypto has been unfairly blamed for devaluing national currencies.
She suggested that Nigerian authorities adopt a balanced regulatory approach instead of a complete ban, as crypto has never been directly linked to currency devaluation despite its association with money laundering and drug trade:
“Nigeria needs a balanced approach to regulation if the industry is to thrive without harming financial and monetary stability. A stable financial system can allocate resources efficiently and manage financial risks. The approach must protect consumers and investors.”
Regulation over targeting crypto exchanges
Cointelegraph previously reported on Nigeria’s crackdown on cryptocurrency trading platforms. Nigerian authorities blamed these platforms for the naira’s rapid depreciation earlier in 2024. Nigerian authorities scrutinized Binance, which has since faced several charges, including tax evasion allegations.
Salami emphasized that Nigerian authorities can accomplish their goals through regulation rather than prohibition. By leveraging the 2022 regulatory framework established by the Nigerian SEC, authorities can require cryptocurrency exchanges to reveal the identities of wallet holders connected to suspicious activities, striking a balance between oversight and innovation.
According to the associate professor, global adoption of international standards for crypto assets, such as the Financial Stability Board’s recommendations, would provide a unified solution to the concerns raised by Nigerian authorities and other regulators worldwide, promoting clarity and consistency in regulating crypto asset activities.
