Business Development and Marketing Lead at YDPay, a crypto exchange in Nigeria, Chike Okonkwo, has said that the country’s moves to regulate the crypto industry may not succeed without a proper alignment between the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC).
Speaking in an interview with Nairametrics, Okonkwo noted that the SEC has taken early steps to engage with operators, refine regulatory guidelines, and introduce licensing categories, including the Virtual Assets Service Provider framework, but warned that the Commission cannot regulate the rapidly evolving ecosystem in isolation.
“The SEC has been at the forefront of bringing the industry closer to government. But so much about the crypto industry is tied to finance. The CBN and other financial regulators cannot leave the SEC alone,” said Okonkowo, whose company has also applied for a SEC licence.
Regulatory uncertainty
The industry had struggled with the aftermath of the CBN’s 2021 directive prohibiting financial institutions from servicing crypto businesses.
However, in December 2023, the CBN released guidelines for virtual assets to allow virtual assets service providers (VASPs) to open accounts with Nigerian banks.
While the guidelines permit banks to maintain accounts for VASPs, Okonkwo said the absence of formal, enforceable rules still creates uncertainty.
“There hasn’t been a clear directive allowing direct partnerships between banks and crypto companies. Since the CBN regulates the financial institutions, when they cough, everybody listens,” he said.
- He said this uncertainty has kept banks cautious, limiting the ability of crypto companies to deepen partnerships, strengthen liquidity channels, or build trust with users who want reliable fiat on- and off-ramps.
- Okonkwo believes the SEC’s licensing efforts can only achieve their intended impact if the CBN formally aligns its position and issues a clear operational framework for banks.
Crypto’s growing intersection with monetary policy
Beyond bank access, Okonkwo argues that the CBN’s involvement is necessary because digital assets, particularly stablecoins, are becoming intertwined with monetary policy.
He noted that global financial markets increasingly rely on stablecoins and that Nigeria remains one of the world’s largest adopters.
“This is also part of monetary policy. If you look at what’s happening in the US, they already know that stablecoins have come to stay. And Nigeria is a major player in that,” he said.
According to him, with inflation and currency volatility eroding savings, more Nigerians are turning to dollar-backed digital assets as an alternative store of value.
“People now understand that they can hold their savings in stablecoins. Whenever they want to convert it to fiat, they can do that instantly,” he said.
He added that platforms like YDPay enable users to keep stablecoin balances, convert them directly to naira, or spend after cashing out, offering a level of flexibility that traditional banks cannot currently match.
Why stablecoin adoption keeps rising
Okonkwo said Nigeria’s stablecoin market is expanding faster than many traditional financial products, driven by economic uncertainty, cross-border transaction challenges, and the country’s young, digitally savvy population.
These factors, he said, have combined to make Nigeria the world’s second-largest stablecoin market.
He said stablecoins have given Nigerians access to speed, global liquidity, and low-cost transactions — areas where legacy financial systems often fall short.
While Nigeria’s domestic banking system handles local transfers efficiently, Okonkwo noted that cross-border flows still come with significant friction.
What you should know
As part of the moves to regulate crypto in Nigeria, the SEC in August 2024 granted an Approval-in-Principle to two crypto exchanges, Quidax and Busha, giving them the status of legally recognised crypto trading platforms in the country.
The two exchanges were approved under the Accelerated Regulatory Incubation Program (ARIP) of the Commission.
- At the time, the SEC had noted that the approved firms were not the only entities that had applied to ARIP and the RI Program.
- It added that other applications received were being assessed and would be granted Approval-in-Principle on a case-by-case basis as they meet all its requirements.
- However, over one year after, the SEC has yet to grant approval to another exchange despite the queue of several exchanges that have applied to the regulator.
