The International Monetary Fund (IMF) has proposed that Nigeria adopt regulated usage of digital assets by granting licenses to international crypto exchanges. This recommendation, outlined in the IMF's recent consultation report for Nigeria, aims to strengthen the country's economic stability and its position in the African crypto sector.

The IMF suggests licensing these platforms to attract foreign investment and improve remittance processes, which are vital for Nigeria given its significant expatriate population. The proposal emphasizes adherence to strict regulatory standards, including robust Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) protocols.

The report highlights substantial discrepancies in Nigeria's balance of payments, approaching $7.5 billion or about 2% of the country's GDP, primarily due to undeclared financial activities facilitated by cryptocurrencies in cross-border transactions. Proper regulation and licensing, the IMF argues, can provide Nigeria with tools for more secure and efficient transaction processes, enhancing control over digital financial transactions, curbing illegal financial activities, and reducing the risks of fraud and money laundering associated with digital currencies.

Furthermore, the report underscores the potential of digital currencies to foster financial inclusion and support economic growth, particularly by improving access to financial services for the unbanked population of Africa.

However, Nigeria has recently witnessed a significant regulatory crackdown on crypto and peer-to-peer (P2P) trading, driven by concerns over volatility in the foreign exchange market attributed to speculative activities in crypto trading. The Central Bank of Nigeria has expressed concerns over activities such as "pump-and-dump" schemes in P2P trading, accusing traders of manipulating the naira through speculative strategies.

This crackdown has resulted in actions against Binance, with Nigerian regulators accusing the exchange of facilitating $26 billion in untraceable transactions, leading to the arrest of two executives and the freezing of over 1,000 bank accounts linked to P2P crypto transactions. Consequently, Nigerian crypto traders have reportedly shifted operations underground, resorting to informal channels such as WhatsApp and Telegram for P2P trading, utilizing non-custodial or self-custody crypto wallets to continue activities outside the realm of regulated exchanges.