OKX exchange cut ties with Nigeria as regulatory issues undermine prospects for crypto industry

Joy Agwunobi 

Cryptocurrency exchange, OKX, has announced its decision to discontinue services in Nigeria due to recent changes in local laws and regulations.

This decision mirrors similar exits by other crypto exchanges, including Binance, which is currently facing legal scrutiny in the country, while the Central Bank of Nigeria (CBN) tightens its grip on the crypto market, claiming that crypto platforms enable speculators to manipulate exchange rates.

In an email to its customers, OKX informed that from August 16, 2024, they will no longer be able to open new trading positions or access services. However, users will still be able to withdraw funds and close existing positions. The exchange advised users to review their accounts and complete necessary actions by 12:00 am (PST) on August 16, 2024.

OKX also requested that users close all open positions and orders in P2P, margin, perpetual, futures, and options markets. Additionally, users were directed to cancel any outstanding spot orders in USDT, DAI, and EURT, redeem assets from Grow products (including Earn, Loan, and Jumpstart), and transfer assets to a wallet of their choice.

The email stated, “We request you to please review your account and complete applicable steps by 12:00 am (PST) on August 16, 2024. While your funds remain secure and accessible in your account, we highly encourage you to withdraw them to your private wallet or your accounts on other third-party platforms by 12:00 am (PST) on August 30, 2024.”

The regulatory environment for cryptocurrencies in Nigeria currently remains uncertain, prompting many experts to call for clearer guidelines and frameworks to govern the industry.  Based on this, stakeholders across various sectors have urged the Securities and Exchange Commission (SEC) to develop a comprehensive regulatory framework for crypto assets in Nigeria.

In February 2021, the Central Bank of Nigeria (CBN) prohibited regulated financial institutions from accepting or facilitating cryptocurrency payments. Although this ban was lifted in December 2023, confusion and uncertainty continue to plague the industry. In May 2024, the SEC directed crypto exchanges to delist the Naira from their platforms to protect the currency from manipulations and halt Naira peer-to-peer trading.

The challenging environment for the industry in Nigeria has led some crypto exchanges, like KuCoin, to start charging additional fees for Nigerian users. KuCoin recently introduced a 7.5 percent value-added tax on top of its 0.1 percent transaction fees for various transactions on its platform. The regulatory uncertainty has also resulted in difficulties accessing websites of exchanges like Coinbase, Quidax, and Binance.

The Association of Capital Market Academics of Nigeria (ACMAN) recently held its first annual conference, themed “Crypto Assets and the Nigerian Capital Market”, where experts from academia, the legislature, capital markets, banking, and ancillary sectors gathered to discuss the future of cryptocurrencies in the country, emphasising the need for a clear and comprehensive regulatory framework.

Emomotimi Agama, the director-general, Securities and Exchange Commission (SEC), in a keynote address titled “Crypto Assets and the Nigerian Economy: Implications for Financial Markets Regulation”, admitted that Nigeria currently lacks a comprehensive regulatory framework for crypto assets, and the SEC’s involvement has been limited to issuing advisory notes on risk management.

Agama acknowledged that while crypto assets present significant opportunities for Nigeria’s economy, the lack of a comprehensive regulatory framework has created uncertainty, which can deter both investors and innovators.  He added that cybersecurity threats, including hacking and fraud, pose significant risks, and a substantial portion of the population lacks adequate financial literacy, making them vulnerable to scams and risky investments.

Meanwhile, Osita Izunaso, chairman of the senate committee on capital market, affirmed the committee’s commitment to developing a comprehensive regulatory framework for crypto assets. He stated that the committee’s approach would focus on investor protection, market integrity, financial stability, and fostering innovation and growth.