In the fast-growing crypto industry in Nigeria, the importance of responsible regulation in virtual asset trading is becoming increasingly prominent. In late February, reports emerged, revealing the Nigerian government’s directive to telecommunication companies (telcos) and internet service providers (ISPs) to block access to several virtual asset trading platforms, including well-known ones like Binance, Coinbase, and Kraken.
This move, led by the Nigerian Communications Commission (NCC), has sparked discussions and concerns within the blockchain and cryptocurrency communities, leading to a swift response from the Blockchain Industry Coordinating Committee of Nigeria (BICCoN).
Recognizing the importance of safeguarding the financial system from potential risks associated with cryptocurrencies/virtual asset trading, BICCoN in a statement expresses significant concerns about the Nigerian government’s current approach.
The sudden directive to block access to these platforms without prior engagement, dialogue, or transparent regulatory frameworks may not effectively address the underlying issues. Such actions could drive the virtual assets market underground, making regulatory supervision and monitoring challenging.
“Nigeria’s present action may—once again—gradually push virtual assets adoption and transactions underground, a place that largely impairs efficient and effective supervision, monitoring, and investigations”.
BICCoN advocates for a collaborative and transparent approach to regulating virtual assets in Nigeria. Instead of resorting to blanket bans or punitive measures, stakeholders should engage in constructive dialogue to develop comprehensive regulatory frameworks that balance innovation, investor protection, and national interests.
According to BICCon, collaboration with industry players allows regulators to establish regulations that promote responsible behavior while fostering growth and innovation in the digital asset ecosystem.
“Besides, denying citizens access to websites that have not been criminalized by any legislative instrument is simply undemocratic and unconstitutional. Such draconian actions are inconsistent with the norms of a democratic society. While they may bring temporary reprieve, they erode trust and confidence, quickly”.
At the core of regulatory frameworks lies the critical aspect of ensuring compliance and integrity within the virtual assets market. BICCoN emphasizes the critical role of robust Know Your Customer (KYC) and Anti-Money Laundering (AML) policies for Virtual Asset Service Providers (VASPs) to mitigate the risks associated with illicit activities.
The body urged regulators to establish licensing frameworks that mandate VASPs to uphold strict compliance standards, thereby fostering transparency and accountability in the industry.
While Nigeria has made progress in acknowledging digital assets through initiatives such as the National Blockchain Policy and the SEC’s regulatory framework on digital assets, there are still notable implementation gaps that require immediate attention.
BICCoN calls for collaborative efforts among regulators, law enforcement agencies, and industry stakeholders to address these gaps and ensure effective regulation of the virtual assets market. This involves streamlining regulatory requirements, adopting a risk-based supervision approach, and promoting cooperation among all parties involved.
“In carrying out their statutory duties, we urge the NSA and the law enforcement agencies to observe the rule of law and due process in order to safeguard the integrity of the process. Besides, it is important that we do not send the wrong message to observers, including the international community, given the sensitivity of the matter”.
As the leading representative body for the blockchain industry in Nigeria, BICCoN noted that it is committed to fostering dialogue and engagement among the government, regulators, and industry participants.
BICCoN distances itself from unethical elements within the industry, condemns the actions of bad actors, and strongly opposes the use of virtual assets for illicit purposes like money laundering, terrorism financing, fraud, and scams. As industry stakeholders, it noted measures to show its commitment to fostering a better and safer-for-all ecosystem.
To address concerns, BICCoN’s leadership has decided to collaborate with member bodies to establish and enforce a Code of Conduct for VASPs operating in the Nigerian market.
VASPs associated with BICCoN will be required to endorse and adhere to this Code. It will also establish robust implementation and monitoring protocols with the support of government and regulatory bodies to tackle industry challenges.
“The leadership of BICCoN has decided to work closely with our member bodies to introduce and implement a Code of Conduct for VASPs in the Nigerian market. VASPs who voluntarily identify with BICCoN would be required to sign and adopt the Code of Conduct”.
Furthermore, the group urges foreign entities in the Nigerian market to engage with local blockchain communities and actively participate in industry initiatives. “CDIN, BNUG, and SiBAN are our member organizations”, the group said, and “In the coming months, we shall be inviting other cooperative communities who identify with BICCoN’s goals and objectives”.
The body believes open communication and cooperation are essential for establishing trust, driving innovation, and ensuring sustainable growth in the virtual assets ecosystem.
BICCoN is ready to collaborate with all stakeholders to create inclusive and progressive regulatory frameworks that will benefit the entire Nigerian economy, the group said.
