Nigeria's regulatory landscape for cryptocurrencies is facing some major shifts at the moment. The Blockchain Industry Coordinating Committee of Nigeria (BICCoN) is organizing a roundtable for May 6 to talk about the future of regulation in the country. Meanwhile, fintech platforms like Moniepoint and PalmPay have started warning users against crypto transactions in compliance with directives given by the Central Bank of Nigeria (CBN). Nigerian crypto exchange Patricia also has its hands full addressing rumors of a shutdown after a hacking incident that happened last year.
As all of this is unfolding, the trial of Binance executives Tigran Gambaryan and Nadeem Anjarwalla in Nigeria has been delayed to later in May, which now only adds to the complexity of the regulatory environment for crypto in Nigeria.
Nigeria to Host Major Crypto Regulation Dialogue
The Blockchain Industry Coordinating Committee of Nigeria (BICCoN) is set to host a pivotal roundtable discussion on May 6, bringing together the newly appointed Director General of the Securities Exchange Commission (SEC), Dr. Emomotimi Agama, and representatives from local and international crypto exchanges. This meeting will try to find consensus on the regulation of cryptocurrencies in Nigeria.
Lucky Uwakwe, the chair of BICCoN, announced that the virtual meeting will include digital assets exchange operators, wallet providers, and other virtual asset service providers (VASPs), along with various industry associations like the Blockchain Nigeria User Group (BNUG), Cryptographic Development Initiative in Nigeria (CDIN), Digital Currency Consortium (DCC), and Stakeholders in Blockchain Technology Association of Nigeria (SiBAN).
The gathering is an effort by Dr. Agama to tackle some of the regulatory challenges and opportunities in the blockchain and cryptocurrency sectors through collaborative dialogue. This meeting comes at a crucial time for Nigeria as the country seems on the fence when it comes to its stance towards cryptocurrencies. Despite lifting a previous ban in December of 2023, the Nigerian government has since scrutinized crypto usage and restricted access to crypto exchange websites through local telecommunication providers.
Nigeria's SEC also proposed increasing the registration fee for crypto exchanges from 30 million naira ($18,620) to 150 million naira ($93,000). Most people are not happy with this suggestion and it has started debates in the industry. Critics argue that the steep increase and a new paid-up capital requirement of 500 million naira ($310,343) could end up negatively impacting local firms in favor of foreign entities.
Uwakwe is hopeful that the roundtable will lead to regulatory advancements and changes that will benefit all stakeholders and encourage innovation in the crypto space.
Regulatory Reversal?
Some Nigerian fintech platforms, including Moniepoint, PalmPay, and Paga, recently issued warnings to their customers against using their accounts for crypto transactions, following directives from the Central Bank of Nigeria (CBN). This comes after CBN ordered some new banks, including Moniepoint, to stop onboarding new customers.
In May 2024, Moniepoint informed its customers that accounts involved in crypto transactions would be closed and the details of those accounts would be shared with authorities.
This is a huge change in attitude from the December 2023 circular that was issued by the CBN lifting earlier restrictions imposed in 2021, which had prohibited financial institutions from servicing cryptocurrency firms. The 2023 circular indicated that banks could open accounts for, and provide services to, cryptocurrency businesses, superseding previous directives from 2017 and 2021. However, the recent actions by fintech firms could suggest a change in mindset.
Users of these fintech platforms have already started facing some issues. For example, a PalmPay customer reported that his account was frozen and would only be unfrozen under the condition that he signed an agreement to stop any crypto transactions. In an email to its customers, Paga also made sure to reiterate its compliance with CBN directives, specifically referencing the 2017 circular that warned financial institutions about engaging with crypto exchanges.
The mixed messages from the CBN is only causing more confusion for people as many customers and businesses are now in limbo, waiting for clear and consistent guidelines from regulatory authorities on how cryptocurrencies should be handled in Nigeria.
Nigerian Exchange Fights Closure Speculation
Meanwhile, Fejiro Hanu, the CEO of Nigerian crypto exchange Patricia, vehemently denied rumors speculating that the exchange is shutting down. Hanu brushed off these comments and called them sensationalism aimed at increasing clicks. The CEO stated that Patricia is still operating normally.
The controversy around Patricia started growing after a hacking incident in May of 2023, where a large amount of customer funds were compromised. Although Patricia told customers that funds were secure, many users have since faced some difficulties accessing their funds. This caused rumors to spread about a potential exit scam.
In an attempt to stabilize the situation, Patricia introduced a strategy in October 2023 to convert customer assets into Patricia Tokens (PTK), which are promised to be reimbursed with the equivalent amount in Tether (USDT), a stablecoin pegged to the US dollar. According to the exchange, PTK is an internal token representing the debt owed to its customers and is not traded on external blockchain platforms.
Hanu has made it a priority to communicate with the public and media to clear the air a bit, and he believes the media often skewed his statements to fit a more dramatic narrative.
Meanwhile, the Nigerian Police Force arrested politician Wilfred Bonse in November of 2023, linking him to the theft from Patricia's crypto wallet. Bonse is accused of criminal conspiracy, unauthorized data alteration, and illicit fund diversion.
Trial Delayed in Nigeria
The trial of Tigran Gambaryan, a Binance executive that is still detained in Nigeria, has been postponed until May 17 after another delay. The delay was caused by Binance’s legal team not receiving the necessary documents for a money laundering case involving Gambaryan and Binance regional manager Nadeem Anjarwalla. The court adjourned to allow time for the documents to be reviewed by the defense.
Both Gambaryan and Anjarwalla, who traveled to Nigeria in February to handle allegations of currency manipulation by Binance, were charged with tax evasion and money laundering. Anjarwalla ended up fleeing to Kenya after escaping custody, but was later arrested again. Extradition proceedings for Anjarwalla are underway.
The charges against Gambaryan and Anjarwalla come as Binance faces separate tax evasion charges by Nigeria’s Economic and Financial Crimes Commission, to which all parties have pleaded not guilty. The timing of these charges were very suspicious and has been questioned by many as it coincides with Binance's announcement to stop all transactions in the Nigerian naira. Binance tried to defend Gambaryan by stating he holds no decision-making power in the company.
