The International Monetary Fund (IMF) has recommended that Nigeria embrace the regulated use of digital assets by licensing international cryptocurrency exchanges.
The watchdog made the suggestion in its latest consultation report to Nigeria. The move aims to strengthen the country's economic stability while improving its position within Africa's cryptocurrency sector.
The recommendation comes amid Nigeria's recent crackdown on cryptocurrency regulations, legal battles with Binance and plans to ban peer-to-peer (P2P) transactions.
Licensing of cryptocurrency exchanges
A recent IMF report suggests that licensing these platforms can help attract foreign investment and improve remittance processes, which is critical for Nigeria, which has a large expatriate population.
The IMF requires compliance with strict regulatory standards, including strong anti-money laundering and countering the financing of terrorism (AML/CFT) protocols.
The advisory also identifies a large discrepancy in Nigeria's balance of payments, which it says approaches $7.5 billion, about 2% of the country's GDP. These gaps are primarily caused by undeclared financial activity, often facilitated by virtual currencies in cross-border transactions.
The IMF maintains that through proper regulation and licensing, cryptocurrencies can provide Nigeria with the tools for a more secure and efficient transaction process. This will strengthen controls over digital financial transactions, curb illicit financial activities, and reduce fraud and money laundering risks associated with digital currencies.
The report also states that digital currencies could help promote financial inclusion. The report highlighted the potential of digital finance to support economic growth and improve access to financial services for unbanked Africans.
control
In recent weeks, Nigeria has seen a major regulatory crackdown on cryptocurrencies and P2P transactions. This strict stance is primarily due to the Nigerian government's concern over volatility in the foreign exchange market, which the government believes is due to speculative activity in virtual currency trading.
In particular, the Central Bank of Nigeria has cited problematic activities such as “pump-and-dump” schemes in the P2P trading space, accusing traders of manipulating the naira through these speculative strategies.
Major developments in the crackdown included action against Binance. Nigerian regulators have accused the exchange of facilitating $26 billion in untraceable transactions, resulting in the arrest of two executives and the freezing of more than 1,000 bank accounts related to P2P cryptocurrency transactions. Ta.
In response to the crackdown, Nigerian cryptocurrency traders are increasingly moving their operations underground, according to local reports. The trader currently continues to operate outside the confines of regulated exchanges, using unofficial channels such as WhatsApp and Telegram for his P2P trading and leveraging non-custodial or self-custodial cryptocurrency wallets. Masu.
