The International Monetary Fund (IMF) has suggested that Nigeria license global cryptocurrency exchanges as a part of its economic reforms to position the country in the African cryptocurrency market.
The agency also asked the Nigerian government to integrate cryptocurrencies into its financial system.
In this regard, the IMF is of the view that permitting global crypto trading platforms to be registered or licensed in Nigeria would integrate them with regulatory requirements applicable to financial intermediaries.
Improving Compliance and Financial Stability
Furthermore, the IMF strongly suggests the use of strict Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) to control crypto trading platforms and other virtual asset service providers in the country. The agency said that enforcing these actions should be through efficient risk-based supervision aimed at increasing compliance and protecting investors’ money.
The report also points out significant discrepancies in Nigeria’s balance of payments, highlighting unrecorded financial transactions, particularly from crypto assets used for cross-border transactions.
The report reads: “ Global crypto trading platforms should be registered or licensed in Nigeria and subject to the same regulatory requirements applicable to financial intermediaries following the principle of the same activity, same risk, and same regulation.”
Nigerian Regulatory Changes and Cryptocurrency Exchanges
The recommendation from the IMF occurred at a time when Nigeria’s Securities and Exchange Commission (SEC) was instituting tighter regulations with respect to cryptocurrency operations. The Nigerian SEC has taken recent measures to prohibit peer-to-peer (P2P) cryptocurrency exchanges with the national currency, which is the naira, in a bid to safeguard it from potential manipulation. This is a component of the overall approach to enhance the management of digital financial flows and reduce illicit financial flows.
At the same time, the Nigerian SEC is grappling with compliance issues in regard to major crypto exchanges such as Binance. Recent activities have also included the arrest of a Binance executive.
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