The International Monetary Fund (IMF) recently released a report stating that Nigeria's economic situation is at risk and recommends that cryptocurrency be included as part of the regulatory system. Instead of a strict regulatory environment, anti-money laundering mechanisms should be implemented and further openness can lead to development. Helping local economies grow.
Nigerian authorities consider crypto assets pose risks
The Nigerian authorities generally agree on the need to manage national economic risks and are very concerned about risks that will affect the macroeconomy. Among them, the authorities emphasize that the risks posed by illegal financial flows, including cryptocurrencies, are exactly the problems that the authorities are solving.
Because the identities of many traders and the sources of their funds were untraceable, Nigerian authorities shut down Binance and other cryptocurrency exchanges at the end of February in an effort to ban capital flight, and also suspended 4,173 crypto exchanges for not complying with CBN accounting and reporting requirements. BDC license.
Recommended reading: Nigeria plans to ban cryptocurrency exchanges: serious manipulation of the local legal currency exchange rate, the naira plummeted 28% within a day. Recommended reason: This article collects opinions and events on Nigeria’s ban on the encryption industry from various perspectives, and can provide insights into the local encryption culture Learn more.
Nigeria’s 2023 net error and omissions (NEO) amounted to $7.5 billion, already accounting for 2% of the country’s GPD, and the value appears to be expanding. These errors often result from unreported cross-border transactions, such as cryptocurrency cross-border transactions or overseas acquisitions and disposals of assets.
Changes in Nigeria’s national balance of payments
This shows the great impact of cryptocurrency on Nigeria, and it is not difficult to understand why the authorities want to strictly regulate or block the encryption industry.
IMF recommends Nigeria accept and regulate crypto industry
However, the IMF gave another piece of advice: accept and effectively manage the development of the encryption industry, mainly for two reasons.
Implementing anti-money laundering helps national development
The IMF believes that integrating cryptocurrencies into its financial system can ensure Nigeria’s position in the African cryptocurrency market. It is recommended that global cryptocurrency trading platforms be able to register and obtain licenses in Nigeria.
The IMF believes that the Nigerian authorities should ensure that cryptocurrency transactions can be tracked through effective AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) regulations, which can reduce the flow of illegal or untraceable funds and is more efficient than prohibition.
On the other hand, the implementation of effective AML/CFT supervision will also have the opportunity to be removed from the FATF’s gray list and gain more international opportunities.
Complete ban on crypto transactions due to high costs and difficulty
Although the Nigerian authorities have recently tried to block the cryptocurrency industry again, a complete ban cannot effectively curb illegal financial flows, but may actually encourage related behaviors.
This article IMF recommends that the Nigerian authorities regulate crypto exchanges and implement anti-money laundering instead of strictly blocking them. First appeared on Chain News ABMedia.
