Central Bank of Nigeria (CBN) has instructed four prominent fintech companies, including OPay, Kuda Bank, Moniepoint, and PalmPay, to halt the onboarding of new customers. This directive comes as part of Nigeria's ongoing efforts to strengthen Know Your Customer (KYC) compliance in both crypto and traditional investing sectors.

The decision to pause new account creation follows an audit of the KYC process, with the CBN expressing concerns that crypto traders were exploiting these platforms to disrupt the Forex (FX) market. This move coincides with the Economic and Financial Crimes Commission (EFCC) recently blocking 1,146 bank accounts involved in unauthorized forex dealings.

While new signups have been temporarily suspended, existing customers of these fintech firms can continue to deposit and transfer funds as usual. The fintech firms affected by the directive have assured customers that the pause in new customer acquisition is temporary and operations will resume once the audit of their KYC processes is completed.

An analysis of the 1,146 blocked bank accounts revealed that only 10% were associated with fintechs, with the majority linked to commercial banks. This government intervention, led by the CBN and supported by the National Security Agency and the EFCC, is aimed at curbing fraud incidents such as tax evasion and money laundering, which have been facilitated by lax KYC requirements on these platforms.

This recent development follows a similar action taken by Nigerian commercial bank Fidelity Bank in October 2023, when it halted all outgoing transfers to the same four fintech companies over KYC concerns.

Meanwhile, the crypto community in Nigeria has welcomed the appointment of Emomotimi Agama as the new director-general of the Nigerian Securities and Exchange Commission. This move is seen as a positive step towards regulating the capital market, enhancing investor confidence, and promoting economic development. Nathaniel Luz, CEO of Flincap, an over-the-counter crypto exchange, expressed excitement about the appointment, noting that the community looks forward to working with the new chair to streamline the licensing process for operating crypto platforms in Nigeria.

Lucky Uwakwe, chair of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN) and founder of SaBi Exchange, also praised the appointment as a "wise decision," indicating optimism about the future regulatory environment for crypto in Nigeria.