As part of its economic reformation initiatives, the International Monetary Fund (IMF) recommends that Nigeria grant licenses to international cryptocurrency exchanges.
According to a recent IMF report, aiming to solidify Nigeria’s position in the African cryptocurrency market is the objective of the country’s effort to integrate cryptocurrencies into its financial system.
It is suggested that “international cryptocurrency trading platforms obtain registration or licensure in Nigeria and are held accountable to the identical regulatory obligations that govern financial intermediaries.”
It states, “Authorities should ensure that crypto trading platforms and other virtual asset service providers adhere to AML/CFT [Anti-Money Laundering and Countering the Financing of Terrorism] controls through effective AML/CFT risk-based supervision.”
In particular, the report highlights inaccuracies and omissions in Nigeria’s balance of payments, which correspond to undocumented financial transactions. Several factors contribute to these inconsistencies, one of which is the “shift toward using crypto assets for cross-border transactions,” which is frequently not reflected in conventional banking records.
The report presents initial 2023 data that indicates “NEOs remain extremely negative” by close to $7.5 billion, or 2% of Nigeria’s gross domestic product, whereas 2020 figures were predominantly positive.
The IMF posits that Nigeria could enhance remittance mechanisms, aid in stabilizing financial markets, and attract international investment by regulating and licensing cryptocurrency exchanges. This is particularly significant given the size of the Nigerian diaspora.
Amidst a backdrop of escalating macroeconomic challenges in Nigeria, including currency instability and inflation, the IMF has endorsed the adoption of cryptocurrencies. The IMF intends to implement cryptocurrencies to facilitate more secure and streamlined transactional procedures by authorizing cryptocurrency exchanges.
Implementing this measure could enhance Nigeria’s regulatory framework regarding the circulation of digital currencies, reduce illicit financial inflows and outflows, and alleviate the vulnerabilities of cryptocurrency transactions to money laundering and fraudulent activities.
Nigeria’s Securities and Exchange Commission is about to issue regulations prohibiting peer-to-peer (P2P) cryptocurrency exchanges utilizing the naira, the country’s official currency. This regulatory shift is presently evident.
After the “perceived impact on the exchange rate of the naira,” Nigerian SEC Director General Emomotimi Agama stated that the prohibition would safeguard the naira from manipulation.
Industry advocates previously regarded the implementation of a prohibition on P2P cryptocurrency payments as an exceedingly challenging endeavor.
