Key Takeaways
- IMF suggests that crypto platforms should be subject to the same registration and licensing requirements as traditional financial institutions.
- IMF has advised the CBN to develop a transparent foreign exchange (FX) intervention strategy to manage currency volatility.
The International Monetary Fund (IMF) has advised Nigeria to tighten regulations on global cryptocurrency platforms operating within its borders. Following a thorough review known as the 2024 Article IV consultation, the IMF has emphasized the urgent need for Nigeria to establish clear rules to govern the burgeoning cryptocurrency market.
In practical terms, the IMF suggests that cryptocurrency platforms should be subject to the same registration and licensing requirements as traditional financial institutions. This move, based on the principle of “same activity, same risk, and same regulation,” aims to create a level playing field and prevent illicit financial activities often associated with unregulated crypto trading.
The IMF’s recommendation also emphasizes the importance of Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) measures in the cryptocurrency space. Effective supervision is crucial to ensure compliance among crypto trading platforms and other virtual asset service providers.
“Moreover, the authorities should ensure the application of AML/CFT preventive controls by crypto trading platforms and other virtual asset service providers through effective AML/CFT risk-based supervision,” the report stated.
Furthermore, the IMF has advised the CBN to develop a transparent foreign exchange (FX) intervention strategy to manage currency volatility. This strategy involves conducting interventions through market-based auctions at announced rates, directed at maintaining external stability and preserve reserves.
While Nigerian authorities have taken steps to address cryptocurrency-related challenges, concerns persist regarding the impact of illicit flows, including those facilitated by crypto platforms. Discussions are underway to explore measures such as delisting the naira from peer-to-peer platforms to mitigate risks associated with market manipulation.
Recently. CBN had also directed fintech companies operating in the country to block the accounts of customers engaging in crypto transactions and to report those transactions to law enforcement agencies.
In February CBN raised concerns over the sum of $26 billion that flowed through Binance Nigeria over the past year from “unidentified sources”. Following this, Binance announced plans to discontinue all Nigerian Naira (NGN) services on its platform.
