A notable advancement in Nigeria’s financial technology (fintech) landscape has emerged as three prominent fintech startups—Moniepoint, Paga, and Palmpay—announce plans to freeze accounts engaged in cryptocurrency transactions. This move follows the classification of crypto trading as a national security issue by Nigeria’s National Security Adviser (NSA), signaling a potential regulatory overhaul in the cryptocurrency sector.
According to statements from Tosin Eniolorunda, CEO of Moniepoint, and sources familiar with the matter, the NSA’s designation has set the stage for new cryptocurrency regulations aimed at banning peer-to-peer (p2p) trading. This regulatory shift marks a stark contrast to the initial relaxation of stance on cryptocurrency by the Bola Tinubu administration, which saw the Central Bank lifting a two-year ban on cryptocurrency transactions in December 2023.
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However, recent months have witnessed a reversal in policy direction, with authorities attributing volatility in the foreign exchange (FX) regime to crypto speculators. The proposed ban on p2p trading stems from the Central Bank’s belief that crypto traders manipulate the naira using this method, particularly through a pump-and-dump strategy.
Allegations made by Central Bank Governor Olayemi Cardoso in February 2024, claiming that Binance processed $26 billion in untraceable transactions, have further fueled regulatory scrutiny. This led to a crackdown on the global exchange and the freezing of over 1,000 bank accounts involved in p2p transactions.
In a recent development, TechCabal reported that four prominent fintech companies were instructed to halt new customer signups, raising questions about the involvement of the Economic and Financial Crimes Commission or the NSA. While the NSA denied any connection, Moniepoint’s CEO, Tosin Eniolorunda, confirmed the directive, citing concerns about rapid onboarding of accounts engaged in crypto trading.
These regulatory measures come amidst concerns about the misuse of easily accessible accounts, facilitated by relaxed regulations aimed at promoting financial inclusion. Traditional banks have long argued that such accounts serve as conduits for illicitly obtained funds. In response, the Central Bank amended regulations in December 2023, mandating fintech startups to collect identification for all account classes by March 2024.
As Nigeria grapples with regulatory shifts in the fintech and cryptocurrency sectors, stakeholders brace for further developments that could reshape the nation’s financial landscape.
