Crypto access issues raise questions about Nigeria’s regulatory intentions

Nathaniel Luz, Flincap’s CEO, suggests the Nigerian government address licensing issues for local exchanges instead of blaming the crypto ecosystem for forex challenges.

The Nigerian government needs to be clear on its stance concerning the industry as its recent actions have been sending mixed signals to the broader crypto community, according to Nathaniel Luz, co-founder and chief marketing officer of Flincap, a local crypto over-the-counter (OTC) exchange.

This comes on the heels of the recent report from local crypto users of the inability to access the websites of various crypto exchanges like Binance, OctaFX and others using traditional telecommunication providers. This development arose on the evening of Feb. 21, with speculation of a possible government ban on crypto platforms.

Speaking with Cointelegraph, Luz said it seems like the government of Nigeria is not interested in having a good relationship with the people in the crypto space. The government blames the current exchange rate of 1,800 naira to $1 on OTC traders trading USDT for naira on the P2P market.

Bayo Onanuga has short memory. You can't effectively ban crypto. China did in 2017, their citizen trade it till date. Nigeria did in 2017, Nigeria became the 8 largest crypto trading country.

Focus on fiscal policies such as eliminating corruption, blocking wastages, improving… https://t.co/6U2flrNp5Y

— That Naija Guy™ (@IamThatNaijaGuy) February 21, 2024

Luz insists blaming OTC traders for the current naira value is incorrect as the crypto industry isn’t responsible for the economic downturn or the naira’s decline. He said:

“I have seen different things in life. I have studied central banks and currencies. But, I have yet to see a government lay the responsibility for its currency failing as the Nigerian government is doing today.”

Listing factors like excess naira, insufficient dollars, heavy reliance on imports, people emigrating and exchanging currency, and uncertainty about Eurobond payments, Luz explained that these issues are unrelated to the local crypto trade industry are to blame for the fall of naira’s value.

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The Nigerian government positively impacted the entire crypto industry by lifting the 2021 crypto ban imposed by the SEC and CBN. This move should enable crypto exchanges to obtain licenses for trading in Nigeria.

However, many startups are still trying to fulfill the criteria for the license, which includes a $340,343 (500 million naira) paid-up capital and an application fee of $20,420 (30 million naira). Luz stated that the Nigerian government would be better off rectifying the licensing challenge for local exchanges than blaming the local crypto ecosystem for its forex challenges.

Nigeria is currently the biggest P2P market in the world, which came about after the Central Bank of Nigeria banned institutions from buying and selling crypto in 2021.