The Central Bank of Nigeria (CBN) is evaluating a new set of guidelines to protect the financial system in a follow-up to the recent ban on certain cryptocurrencies in Nigeria, according to The Nation.
The apex bank may authorise Bureaux De Change Operators (BDCs) to resume forex transactions at the Nigerian Autonomous Foreign Exchange Market (NAFEM) – the official market tomorrow.
Sources at the CBN said the planned measure on cryptocurrencies was not only to protect investors but also to safeguard the overall financial stability of the country.
The sources acknowledged the potential of cryptocurrencies but stressed the need for appropriate regulations to ensure that their coming does not get out of control.
One of the sources cited manipulative tactics, especially “spoofing”, in the unregulated peer-to-peer (P2P) crypto market.
Spoofing involves placing large buy or sell orders on a platform without intending to go through with the deal. This creates a false impression of supply or demand thus manipulating others to trade at prices that benefit the spoofers.
This deceptive practice, often coupled with schemes like “pump-and-dump”, has caused substantial financial losses for unsuspecting investors and contributed to the devaluation of the Naira. It has also fueled investor anxiety, further exacerbating market volatility.
Sources said it was important to revise the regulatory framework to “effectively combat spoofing and other manipulative tactics”.
“Previous guidelines focused on limiting banking involvement with cryptocurrencies but left the P2P sector largely unsupervised, allowing unethical individuals to take advantage”, one of the sources recalled.
This regulatory gap, he said, “has allowed spoofing and similar practices to thrive, undermining the market’s integrity and eroding investor confidence”.
The source proposed implementing “stricter measures for P2P platforms, establishing robust systems to monitor transactions, and imposing clear penalties for spoofing activities.
“These actions would discourage such manipulative practices and create a safer trading environment”, he said.
Another official of the CBN, who also spoke to The Nation on condition of anonymity, said the apex bank would align with the position of the Presidency and that of the Securities and Exchange Commission (SEC).
President Bola Tinubu’s aide, Mr. Bayo Onanuga, had expressed concern over the potential impact of certain cryptocurrency platforms on Naira’s value in the foreign exchange market.
BDCs may resume FX transactions at the official window Monday
President of Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said yesterday that the CBN may authorise Bureaux De Change Operators (BDCs) to resume forex transactions at the Nigerian Autonomous Foreign Exchange Market (NAFEM) – the official market -tomorrow.
Gwadabe spoke after an emergency meeting with CBN officials in Abuja.
The apex bank is yet to issue a circular to that effect.
Meanwhile, the naira yesterday exchanged at N1,800 to a dollar at the parallel market and N1,665 to a dollar at the official market on Friday.
Gwadabe told The Nation that over 4,500 CBN-licenced BDCs would participate in the official trading transactions, where banks also trade as authorised dealers.
The BDCs are expected to fund their naira accounts with the CBN in readiness for the transaction.
“Our members will fund their accounts with the CBN on Monday (tomorrow) to enable them transact at the official window”, he said.
He said the apex bank warned the BDCs on the importance of rendition of returns and compliance with anti-money laundering regulations.
Gwadabe assured the CBN that BDCs would abide by policy on rendition of returns and continually provide detailed reports on how previous dollars sourced from the market were utilised.
The ABCON boss said the naira exchange rate against the dollar would crash going forward as more BDCs have access to dollars.
Gwadabe said although BDCs were happy with the resumption of dollar sales to operators, they were also requesting that the CBN should open more windows for them to operate, including having access to diaspora funds.
“We want more windows to be opened for BDCs instead of restricting BDCs to official market funds”, he said.
The CBN had on Friday proposed new regulations expected to significantly increase the minimum capital requirements for BDC operators in the country to N2 billion and N500 million for Tier 1 and Tier 2 licenses respectively.
This is a change from the previous requirement of N35 million for a general license.
This was contained in the Revised Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria- Exposure draft.
“The Guidelines revise the permissible activities, licensing requirements, corporate governance and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CT) provisions for BDCs. It also sets out new record-keeping and reporting requirements, among others”, the publication said.
The updated regulations encompass numerous modifications to the guidelines governing BDC activities within the nation. Once approved, these updated guidelines will come into effect on a date determined by the CBN.
The apex bank had in June 2021, ended the sales of forex to BDCs, saying the parallel market has become a conduit for illicit forex flows and graft.
