The promise of the blockchain and cryptocurrency still remains strong. Globally, there continues to be growing interest in the blockchain and peer-to-peer exchanges. We are seeing the institutional adoption of crypto and a rise in interest in retail adoption, too. We have seen the example in the approval of ETFs for bitcoin. However, with every innovation, there is bound to be an inevitable back-and-forth between the government and the pioneers, especially regarding regulation from the government.
The following opinion editorial was written by Akangbe Oladotun Wilfred, the CMO of Flincap. Akangbe is a marketing veteran in the blockchain space having contributed to several Blockchain projects such as Dfinity, Solana, Band protocol, Ocean protocol, Injective, and Nervous network (CKB).
Navigating the Issues of the P2P Exchange Network in Nigeria
This need for regulations is not necessarily bad, as users should be protected by all means. Past and present innovations have had to go through the phase of getting regulated. AI is currently undergoing this phase, and it is undoubtedly clear that AI wields certain power, and there are possible dangers in using AI in the future. Regulations are not an issue and never should be for innovators. It is a normal phase globally.
With this understanding, we can now narrow it down to the current situation in Nigeria. The government seems to be cracking down on Binance and some other exchanges due to their peer-to-peer crypto exchange network. The peer-to-peer (P2P) exchange system is one of the notable use cases of blockchain technology. However, this use case has been raising many concerns recently, not only for the Nigerian government. Many are concerned with the possibility of using the system for money laundering and currency speculation. Just last year, Binance had an anti-money laundering case with the United States government in which they had to plea out.
In Nigeria, the bone of contention between Binance and the government is the possible use of the platform’s P2P system for currency speculation. There are also other issues, like money laundering due to the pseudonymous nature of transactions in the P2P system and generally on the blockchain. All of these concerns and problems are challenges common to the use of technology in this age.
Without a doubt, regulations can help to nurture and enhance the use of the blockchain, even beyond decentralised finance, payments, and peer-to-peer transactions. Regulations are designed to enhance, not kill, innovations. P2P has advantages and upsides, which can and should be studied and applied to aid the nation. The Nigerian government should do justice by examining the P2P transaction system before making its regulations and decisions. As I have said, there are a lot of upsides to this system.
I would also like to see a positive examination of the blockchain narrative. We have gone through many phases in Nigeria, from crypto getting banned and restricted to being endorsed. Just a few months ago, we got an endorsement from the Central Bank of Nigeria (CBN) with rules for the operation of cryptocurrency exchanges in Nigeria. This endorsement shows that even the government can see the promise of crypto, the blockchain, and related use cases for the nation. There is a certain level of understanding and promise here. It might not be deep, but it is there.
Since we have a consensus on the importance of the blockchain and its use cases, I suggest that the Nigerian government set up a capable committee of experts in the fields of blockchain, KYC, and anti-money laundering to give adequate and rational solutions to this recurring issue. We have had a lot of back-and-forth on these issues, which is quite normal for a technology still evolving in its early stages. However, these current issues can be resolved by properly investigating the existing facts between both parties.
Benjamin Franklin said, “Out of chaos comes clarity.” We can use this chaos as an opportunity to gain clarity. Amidst all this confusion, there is a real chance to find our way forward and improve things for all parties involved. A win in this situation can position Nigeria at the forefront of blockchain adoption, even beyond the peer-to-peer system, payment, and settlement. Once we get this particular use case right, tons of products could benefit from decentralised finance and the blockchain.