The Blockchain Association of Nigeria, SiBAN, has called on the federal government to revisit the ban on cryptocurrency activities in Nigeria.
The group said the need to critically look at the decision again becomes imperative considering that many people feel the decision was more out of fear than a proactive industry regulatory attempt.
The association said that even among government circles, many people are of the opinion that the most sensible approach to the market is a robust regulation since it is impossible to enforce a total ban.
Cryptocurrencies are predicted to have the prospects of challenging traditional banking in the coming years and so, a forward looking economy, only needs to effectively prepare for that seismic shift.
Federal government, through the Central bank of Nigeria, CBN, recently placed a ban on cryptocurrency trading in the country. The CBN said the directive became necessary to protect the financial system and the generality of Nigerians, including the youth population, from the risks inherent in crypto assets transactions.
The regulator claimed the risks have escalated in recent times and have dire consequences for the integrity of the financial system and financial stability.
Although, SiBAN agreed that the market’s link with criminals is not a surprise, it contended that it is a reality many of the cryptocurrency exchanges have taken measures to address. Their efforts are said to have ensured that Nigeria does not feature on the list of countries considered a haven for money laundering, illicit transactions, and terrorism financing.
President Blockchain Association of Nigeria, Senator Ihenyen said: “Nigeria is one of the safest crypto markets in the world when it comes to the use of cryptocurrencies. Nigeria is not even on the map for illicit transactions for cryptocurrency transactions, but you find the likes of the US, Russia, Germany, and Vietnam.”
Ihenyem says that in view of the delay by regulators to sanitise the market, exchanges that operate in the country have been self-regulating their operations, in the context of established guidelines and a code of conduct for market participants. Those guidelines span a broad spectrum, from knowing your customers, KYC, to maintaining transparency and ensuring security against hacks.
He said that the guidelines employed by crypto exchanges often align with elements defined by the International Organisation of Securities Commissions, IOSCO in a 2000 paper. The elements include transparency and accountability, contractual relationships, and coordination, and information sharing.
They also have to agree to provide complete and accurate information when opening a Binance account and agree to timely update any information they provide to Binance to maintain the integrity and accuracy of the information.
BuyCoins also said it has been proactive about setting up KYC and AML frameworks to limit the extent to which its users can perpetrate fraud. Prior to trading on the platform, they are required to undergo an effective yet user-friendly verification process involving the submission of their Bank Verification Number (BVN), phone numbers, and other legitimate forms of identification.
The use of BVN and other forms of ID shows an alignment between crypto exchanges and the Central Bank of Nigeria when it comes to the safe and ethical movement of money. The initiative that Nigerian crypto exchanges have taken to ensure that users are trading safely and in compliance with general anti-money laundering policies indicates a clear readiness to cooperate with national regulators.
On their part, Ihenyen said SiBAN, as well as other blockchain associations, have from time to time engaged operators to ensure they are compliant with the best practices.
In 2020, the Blockchain Industry Coordinating Committee of Nigeria (BiCCoN) working together with authorities set a task force to police crypto scams in the country. Ihenyen says the measures already put in place could be the best place to start regulating the industry instead of a ban.
A ban, experts say, would potentially expose customers to poorly regulated investment products in other jurisdictions, which could lead to fewer avenues for recourse and less protection for consumers.