Advancing Cryptocurrency Regulation in Nigeria: A Critical Necessity

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Adedeji Owonibi advocates for the regulation of cryptocurrencies in Nigeria to combat financial crimes and ensure the security and scalability of the industry by addressing the complexities of tracking illicit transactions.

The call for regulation of cryptocurrencies in Nigeria has intensified, highlighting the urgent need to tackle financial crimes, especially money laundering, within the growing digital currency space. Adedeji Owonibi, the co-founder of A&D Forensics, has been at the forefront of this advocacy, emphasizing the role of regulation in curbing these illegal activities. His insights shed light on the complexities and challenges of cryptocurrency transactions, highlighting the need for government intervention through regulation.

Owonibi’s position on the matter is clear; without strict regulations, the cryptocurrency sector in Nigeria remains a breeding ground for financial abuse. He argued that the Nigerian government should establish comprehensive laws regulating cryptocurrency activities to deter and mitigate the risk of money laundering and other financial crimes. This perspective is particularly relevant after the Central Bank of Nigeria (CBN) lifted its ban on crypto transactions, allowing banks to operate virtual asset service provider (VASP) accounts.​​​​

The importance of such regulation cannot be overstated, especially given Nigeria’s position as an important player in the global cryptocurrency market. Despite previous regulatory challenges, including a ban by the CBN, the use of cryptocurrency in Nigeria has seen a remarkable surge. The country ranks prominently in global indices of cryptocurrency adoption, driven by factors such as limited access to traditional banking services, currency devaluation and inflation. However, this surge in crypto activity also raises the specter of increased financial crime, making the call for regulation even more critical.

Owonibi’s insights also highlight the potential for regulatory frameworks to improve security and scalability of the crypto industry. He points to the development regulation created by the National Information Technology Development Agency (NITDA) as a significant step towards creating an enabling environment for the growth of the blockchain and crypto industry. This move, according to Owonibi, is what the CBN should have considered as early as 2021 instead of severing ties between cryptocurrency exchange firms and local banks.

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In addition, Owonibi delves into the ins and outs of tracking and investigating cryptocurrency fraud, revealing that while over-the-counter (OTC) transactions and crypto mixers present challenges to law enforcement, advances in regulatory technology and international cooperation are improving the ability to track illegal activities. It highlights the evolving landscape of blockchain anonymity and global efforts to establish standards for transaction traceability, highlighting the importance of regulatory measures in combating cryptocurrency fraud.

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