The IMF calls for Nigeria to introduce regulations on global cryptocurrency exchanges

The International Monetary Fund (IMF) has recommended that Nigeria impose registration or licensing requirements on global cryptocurrency trading platforms. This advice follows the IMF’s consultations with Nigeria under Art. IV of 2024 and a detailed analysis aimed at improving the country’s financial stability. The latest IMF staff report highlights the urgent need for a robust regulatory framework for Nigeria’s emerging cryptocurrency market, aimed at protecting investors and maintaining financial order.

IMF pushes for uniform cryptocurrency regulations in Nigeria

The report suggests that cryptocurrency platforms should adhere to the same regulatory requirements as traditional financial intermediaries, applying the principle of “same business, same risk and same regulation.” This measure is an integral part of the overall strategy to harmonize cryptocurrency regulations around the world and curb all types of illegal financial activities. The IMF’s pro-regulatory policy is based on the assumptions that these platforms can influence the manipulation of the value of the local currency in foreign exchange markets.

In February CBN expressed concerns about the significant volume of transactions from unidentified sources passing through cryptocurrency exchange platforms. The bank in particular noticed this Binance in Nigeria last year it conducted $26 billion in transactions from unidentified sources, leading to regulatory scrutiny and subsequent legal action against its executives. These ongoing challenges underscore the urgent need for effective regulatory measures to address the risks associated with the rapid expansion of cryptocurrency trading platforms.

In response to CBN’s concerns about the huge number of transactions from unidentified sources passing through cryptocurrency exchange platforms in February, one of the bank’s specifications projected that Binance Nigeria processed $26 billion in transactions from unidentified sources last year. They are currently subject to regulatory scrutiny and subsequent legal proceedings against their management. Continuing emerging issues signal the need for effective supervisory arrangements to minimize the negative impacts of the surge in trading on cryptocurrency platforms.

SEC changes regulations regarding cryptocurrencies, opens doors to banks

Given the complexity of cryptocurrency regulations, the Nigerian administration has taken extensive measures to address issues such as cryptocurrency trading. According to the SEC, in May 2022, the commission issued new regulations regarding digital asset issuance, platforms and custody. The regulations, which include a capital adequacy of N500 million for cryptocurrency exchanges seeking a virtual asset service provider license, have seen a monumental shift towards regulation instead of an outright ban.

In December 2023, the SEC took a fresh approach by lifting a ban on banks handling cryptocurrency transactions that involve strict Know your customer (KYC) and anti-money laundering (AML) controls. This was part of a broader plan to integrate the cryptocurrency into the country’s traditional financial markets by reducing the risks involved.

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