OKX, a cryptocurrency exchange, has exited the Nigeria market attributing the decision to changes in the local laws and regulations. The notice, sent to users on July 17, stated that clients must interact with the application’s functions by August 16, 2024.
After the deadline, users will withdraw funds until August 30, after which they will need to contact customer service for account-related actions. This comes after the earlier decision to suspend Naira withdrawals in May 2024.
Government Crackdown on Crypto Exchanges
The Nigerian government has been stepping up its measures against cryptocurrency exchanges. This year alone, Binance faced legal complaints for manipulating the Naira, money laundering, and tax evasion, which increased the regulator’s attention.
The government then restricted the access to the key centralized platforms, including OKX, which had already been in the process of ceasing operations in Nigeria.
Subsequently, these actions are part of a larger initiative to address the crypto industry. The Nigerian authorities arrested two more Binance employees, Nadeem Anjarwalla and Tigran Gambaryan in March 2024, escalating the pressure. The Economic and Financial Crimes Commission (EFCC) has also requested user data from Binance, sparking privacy concerns among users.
In addition, the crypto exchange KuCoin is implementing a 7.5% value-added tax on transaction fees for Nigeria trades. This regulatory update that comes into effect from the 8th of July 2024 was announced in compliance with local tax laws.
Nigeria’s New Regulatory Framework
The Nigerian Securities and Exchange Commission (SEC) recently released new guidelines with regards to Virtual Service Asset Services Providers (VASPs). These rules oblige VASPs to obtain the SEC’s accreditation, submit statistics on the trading activity involving Nigerian citizens, and have a local presence.
The authorities explained the steps are needed to prevent money laundering, financing of terrorism, and manipulating the currency rates.
Nevertheless, the Nigerian government’s stance on cryptocurrencies has changed and that is a step in the right direction. Following the ban on crypto-related transactions by banks in 2021, the Central Bank of Nigeria permitted banks to facilitate accounts for VASPs in December 2023. However, the recent crackdown shows that in the future there will be tougher control over the industry.
User Reactions and Outlook for Binance Exec
The notice from OKX has elicited dissatisfaction among the Nigerian crypto users flooding the social media platforms to complain. The customer support team at OKX has confirmed that they cannot offer know-your-customer (KYC) services for Nigerian users which poses a problem for the customers.
With the increasing scrutiny of the regulatory authorities, users may resort to DEXs to bypass the legal frameworks. However, this shift could reduce their access to traditional financial services and increase their vulnerability to risk.
The exit of OKX and Binance from the Nigerian market shows that the crypto market has a lot of problems in dealing with the existing regulations. With the Nigerian government increasing its supervision, the fate of cryptocurrency trading is still uncertain.
At the same time, the general public is concerned about the situation especially after the arrest of Binance managing director Tigran Gambaryan. Some of the US lawmakers have been particularly vocal about the humanitarian aspects of his case. As reported by the CoinRepublic, they have suggested that his detention should be considered a hostage situation if it is not addressed soon.
