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.
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.
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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.”
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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).
