KuCoin, a major cryptocurrency exchange, has decided to suspend all naira-based peer-to-peer (P2P) trading. This decision comes in response to increasing scrutiny from Nigeria’s regulatory authorities. The move follows a meeting by the Nigerian Securities and Exchange Commission (SEC) with industry players, urging them to cease P2P trading activities.
KuCoin’s Strategic Move
KuCoin announced the suspension in a blog post, notifying users about the temporary halt of P2P naira services and Fast Buy service via Naira card. The exchange stated that this decision is part of its ongoing efforts to enhance its services and ensure compliance with Nigerian regulations.
The decision to halt P2P trading is likely a preemptive measure to avoid conflicts with the Nigerian government. This follows the recent federal charges faced by another major exchange, Binance. By taking this step, KuCoin aims to navigate the complex regulatory landscape and continue operating without major disruptions.
Nigerian Government Intensifies Scrutiny
The Nigerian government has intensified its scrutiny of P2P cryptocurrency trading. The office of the Security Adviser has instructed fintechs and banks to close bank accounts associated with crypto trading and report such accounts to the authorities. The Economic and Financial Crimes Commission (EFCC) has also blocked thousands of accounts involved in crypto trading.
Emomotimi Agama, the Director-General of the SEC, blamed P2P crypto traders for the depreciation of the naira. During a meeting on May 7, he expressed concerns about the impact of P2P trading on the naira’s exchange rate. Despite these stringent measures, the naira continues to face challenges, falling to N1,520 per dollar at the FOREX parallel market, a 3.4% decline from N1,470 per dollar.
Binance’s Regulatory Struggles in Nigeria
Binance, another major player in the crypto space, has faced significant regulatory challenges in Nigeria. Binance CEO Richard Teng recently accused a Nigerian government official of pressuring crypto representatives to accept a secret agreement to settle Nigeria’s claims against the exchange. According to Teng, the “settlement” involved a $150 million bribe from a Nigerian government official.
“Counsel reported back that he had been presented with a demand for a significant payment in cryptocurrency to be paid in secret within 48 hours to make these issues go away,” Teng wrote. In response, Nigeria denied the bribery accusations, claiming Binance was trying to divert attention from its own actions.
Binance had to discontinue all services involving the Nigerian naira due to regulatory scrutiny. The Nigerian government imposed a $10 billion fine on Binance, part of a broader effort to stabilize the local currency. Globally, Binance faces increasing regulatory scrutiny, with charges from the Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC) for operating unregistered exchanges and offering unregistered securities.
KuCoin’s Compliance Efforts
Amid the crackdown on cryptocurrency platforms by the Nigerian government, KuCoin has taken steps to comply with regulatory demands. The exchange deactivated its P2P function for Nigerian users and delisted the naira from its platform. P2P trading allows users to trade without third-party interference, a feature highly valued by the crypto community.
KuCoin announced, “Starting from 2024-05-15 08:00 (UTC), we will temporarily suspend all P2P Nigerian Naira (NGN) services and Fast Buy service via Naira cards.” The platform emphasized that this pause is to focus on compliance and create a more robust and secure environment for all users.
KuCoin remains committed to resolving this matter swiftly and efficiently. The exchange looks forward to resuming P2P Nigerian Naira services and Fast Buy service via Naira cards in a fully compliant manner. KuCoin is the third crypto platform to disable its P2P function for Nigerian users, following similar actions by Binance and OKX.
Broader Implications for the Crypto Market
The Nigerian government’s crackdown on cryptocurrency platforms reflects a broader trend of increased regulatory scrutiny in the crypto industry. These actions aim to stabilize the naira and prevent illegal activities associated with crypto trading. However, they also pose significant challenges for cryptocurrency exchanges and their users.
Earlier in February, Binance disabled its P2P function and exited the Nigerian market after its website was blocked. The National Security Adviser, Nuhu Ribadu, arrested two Binance officials, Tigran Gambaryan and Nadeem Anjarwalla, during an official visit to Nigeria. Anjarwalla, Binance’s Africa regional manager, escaped from the country on March 22 while in custody, while Gambaryan remained in custody facing trial.
Conclusion
KuCoin’s decision to halt naira-based P2P trading underscores the growing regulatory pressures faced by cryptocurrency platforms in Nigeria. As the Nigerian authorities intensify their crackdown on crypto activities, exchanges must navigate a complex regulatory environment to ensure compliance and continue operations. KuCoin’s proactive approach highlights its commitment to compliance and user security, aiming to resume services in a more robust and secure manner. The evolving regulatory landscape in Nigeria serves as a critical test for the global cryptocurrency market, reflecting broader challenges and opportunities for the industry.
