he Central Bank of Nigeria's attitude towards cryptocurrency has been inconsistent in recent times. In 2021, the CBN imposed a complete ban on cryptocurrency transactions, directing banks and other financial institutions to close accounts involved with crypto trading. However, in December 2023, the central bank took a U-turn by issuing new guidelines allowing banks to open accounts for crypto exchanges and provide settlement services for cryptocurrency transactions.
This change in stance fueled growing crypto adoption in Africa's largest economy. But just a few months later, major fintech platforms have warned their users that dealing in cryptocurrency through their services may lead to account blocks or closures.
Fintechs Play it Safe
Popular Nigerian financial applications like Moniepoint, PalmPay and Paga notified customers in early May 2024 that facilitating crypto transactions on their platforms is prohibited. Moniepoint stated it will close accounts of anyone found engaging with virtual currencies, while sharing their details with authorities. Paga similarly reminded users of the 2017 CBN directive restricting banks from supporting crypto exchanges.
PalmPay also froze an account until the user signed an agreement avoiding cryptocurrency. This comes after the CBN reportedly ordered some new banks to halt onboarding customers, signaling renewed crypto crackdowns. With the regulatory landscape in flux, fintech companies are adopting a cautious approach to avoid sanctions from the central bank that oversees their operations.
Users Left in Limbo
The flip-flopping regulations have left many Nigerian crypto owners confused about the legality of their digital asset investments. While the recent guidelines opened doors for the industry to formally operate within the country's financial system, cracking down now contradicts that decision. Unless the central bank provides unambiguous clarification, fintech platforms will likely continue disallowing crypto to maintain compliance as adoption rises nationally. This ambiguous stance discourages innovation and leaves users with legitimate cryptocurrency holdings in limbo due to the banks' apprehensions.
With growing peer-to-peer trading and many Nigerians turning to cryptocurrency amid high inflation, there is an urgent need for the central bank to take a definitive regulatory position that balances facilitation and consumer protection. Fintechs following outdated directives only risks stunting the growth of an otherwise promising sector with the potential to power financial inclusion. As debates continue on developing appropriate crypto regulations, a clear and consistent regulatory framework will be instrumental for the security and freedoms of all parties involved.
