Amid the rapid decline of the naira and soaring inflation rates, the Nigerian government has focused on platforms providing cryptocurrency services. However, many Nigerian crypto enthusiasts believe that banning naira trading on cryptocurrency exchanges will likely exacerbate the country’s economic woes.
Concerns Over the Naira Ban
Rume Ophi, the executive secretary of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN), criticized the official narrative that global cryptocurrency platforms are to blame for the naira’s depreciation. He argued that this perspective is impractical and emphasized that Nigeria can effectively regulate the cryptocurrency industry through the framework introduced by the Nigerian Securities and Exchange Commission (SEC) in 2022.
The naira’s value has plummeted, and inflation has hit a nearly three-decade high of 29.9%. In response, the government has targeted cryptocurrency platforms, which have become popular for trading and establishing an informal value for the naira.
Call for Balanced Regulation
Iwa Salami, an associate professor at the University of East London, argued in a recent opinion piece that crypto has been unfairly blamed for devaluing national currencies. She suggested that Nigerian authorities adopt a balanced regulatory approach instead of an outright ban, noting that cryptocurrency has never been directly linked to currency devaluation, despite its association with money laundering and the 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,” Salami stated.
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Regulation Over Prohibition
Salami emphasized that Nigerian authorities could achieve their goals through regulation rather than prohibition. Leveraging the 2022 regulatory framework established by the Nigerian SEC, authorities can require cryptocurrency exchanges to disclose the identities of wallet holders involved in suspicious activities. This approach balances oversight with innovation, ensuring that the industry can develop responsibly.
The Nigerian government’s crackdown on cryptocurrency trading platforms, including scrutinizing Binance for various charges such as tax evasion, highlights the tension between regulation and innovation. Salami advocated for global adoption of international standards for crypto assets, like the Financial Stability Board’s recommendations, to provide a unified solution to the concerns of Nigerian authorities and other regulators worldwide. This would promote clarity and consistency in regulating crypto asset activities.
