Nigeria is among the world’s biggest users of cryptocurrency. We have worked hard to build a safe and transparent ecosystem for our Nigerian customers and today, Luno has more than 3 million customers in the country.
This mission was unfortunately interrupted recently, when a Central Bank of Nigeria circular was published, prohibiting banks and other payment providers from working with cryptocurrency platforms. We share the Central Bank of Nigeria’s concern for Nigerians, but we feel that the approach it has taken here does not achieve the CBN’s objectives in this instance.
Any attempt to restrict access to cryptocurrency does not protect Nigerians. It holds them back and leaves them vulnerable. It prevents honest Nigerians from taking advantage of all that cryptocurrency has to offer them. It also leaves the regulators at a disadvantage. Blanket bans push people “underground” [i.e. trading via Whatsapp or Telegram groups, for example]. This makes activity involving transparency less transparent and means financial bodies have less visibility of what’s going on.
Pushing people underground also makes it easier for scammers to exploit Nigerians, and we are already seeing Bitcoin trade at huge premiums in the country as a result of the ban. Other companies have made the choice to find workarounds that are less visible for regulators – for example, Peer-2-Peer (P2P) trading. Our view is that P2P trading would go against the spirit of the CBN’s directive. We believe that the focus should instead be on demonstrating to the CBN that exchanges such as Luno have the necessary controls in place to address the concerns it has in relation to cryptocurrencies.
Nigeria’s regulators have taken a pragmatic and forward-looking approach to cryptocurrency in the past, with the SEC even actively developing a framework to regulate. We’re confident that this issue can be resolved quickly, so that Nigeria can continue to play a central role in the growth of cryptocurrency. This also isn’t the first time Luno has faced a situation like this. When the Malaysian Securities Commission introduced a new regulatory framework for crypto exchanges in the region, Luno worked with regulators to become the country’s first licensed exchange. This has created an inclusive and transparent cryptocurrency ecosystem in the country, making it easier for consumers and regulators alike. We would like to work with CBN and regulators in Nigeria as we have in other countries, to create an open dialogue and to come to a solution that works for everyone.