Cryptographic Access Concerns Raise Questions About Nigeria’s Regulatory Objectives
Nathaniel Luz, founder of Flincap, urges the Nigerian government to address licensing issues for local exchanges rather than blaming the crypto ecosystem for forex challenges. As Nathaniel Luz, co-founder and marketing director of the local crypto firm Flincap, points out, the Nigerian government needs to clarify its stance on the crypto industry as recent actions have sent mixed signals to the wider community. This comes after local cryptocurrency users reported being unable to access various cryptocurrency exchange websites such as Binance and OctaFX using traditional telecommunications providers. This situation, revealed on February 21, sparked speculation about a potential government ban on digital currency platforms.
Luz criticized the Nigerian government for seemingly not wanting a positive relationship with individuals in the crypto space, attributing the current exchange rate of 1,800 Nigerian Naira to 1 USD to over-the-counter traders trading Tether for Naira on peer-to-peer (P2P) markets. He insists blaming OTC traders for the current value of the Naira is incorrect as the crypto industry is not responsible for the economic recession or the devaluation of the Naira. Luz emphasized that blaming the crypto local industry for foreign exchange issues is misguided and highlighted factors such as excessive Naira printing, insufficient US dollars, heavy import dependence, emigration, and uncertainties around Eurobond payments that have no connection to the local crypto sector.
In December 2023, the Nigerian government lifted the 2021 cryptocurrency ban imposed by the country’s Securities and Exchange Commission and the Central Bank of Nigeria, allowing digital currency exchanges to apply for licenses in Nigeria. However, many crypto startups struggle to meet the licensing requirements, which include a paid-up capital of 500 million Naira ($340,000) and an application fee of 30 million Naira ($20,000). Luz argued that the Nigerian government should focus on addressing licensing issues for local exchanges instead of attributing forex problems to the local crypto ecosystem.
Nigeria is currently the world’s largest P2P market, emerging after the Central Bank of Nigeria’s 2021 ban on banking institutions from engaging in cryptocurrency transactions.
