Nigeria crypto sandbox setback after Quidax P2P halt

Nigeria has faced a significant setback in its effort to regulate its crypto industry after one of the companies participating in the sandbox halted its peer-to-peer (P2P) services. The company, which recently earned a provisional license, released a statement halting the service after five months of launching it.

The move comes as Nigeria’s Securities and Exchange Commission (SEC) tightens oversight of the crypto industry under its Accelerated Regulatory Incubation Program (ARIP). ARIP is a sandbox program designed to help crypto exchanges in the country transition from a largely informal market into a regulated industry. This way, the exchanges are integrated into Nigeria’s capital markets framework.

Nigeria faces challenges in its move to regulate the crypto industry

According to its statement, Quidax claimed that the decision to halt its peer-to-peer (P2P) services was a result of user preference. Quidax informed users via email that its P2P marketplace would be shut down, removing ads, merchant chats, and other services. The exchange claimed that while it is shutting down its P2P marketplace and other services, products, including instant swaps and order book trading, would continue to operate without issues.

P2P trading has long been one of the most controversial segments of the crypto economy of Nigeria. It enables users to buy and sell digital assets directly with one another, while settling transactions through bank transfers offline. The structure has made P2P a liquidity channel, but also another headache for regulators. Analysts and experts have noted that regulating the marketplace will show the practical limits of what regulators are currently willing/able to do when it comes to the crypto industry.

While it remains very active, there have been a lot of issues concerning the service and other vices being carried out by users acting as merchants on several exchanges. In 2024, the SEC raised concerns about P2P crypto markets. The regulator highlighted several issues, including opaque transaction flows, difficulties in monitoring off-platform settlements, and the risks of exchange rate manipulation on platforms. The Nigerian regulator also noted the issue of foreign P2P platforms operating in legal grey areas in the country.

Platform licensing slows as regulators move to determine readiness

According to reports, Quidax was supposed to correct all the issues and risks with its P2P service. Rather than allow P2P activity spill into informal channels, the exchange was supposed to create an internal structure that would put the service within a controlled and regulated environment. Users who sign up to become merchants would have to complete a full verification process, which includes a level 3 know-your-customer verification, two-factor authentication, and a minimum participation history. The applications were reviewed by Quidax, and approved merchants were awarded special badges.

Despite the slight success of the program and the safeguards put in place, the feature has now been discontinued, suggesting that the Nigerian regulator might even be looking into stricter models to control P2P in the future. The timing of Quidax’s announcement came at a time when things related to licensing have slowed. The exchange and fellow competitor Busha were expected to transition into full crypto licenses by August 2025, but things have since stalled, with the Nigerian regulator pausing approvals to determine its readiness.

Meanwhile, the crypto regulation in Nigeria is becoming more demanding. Earlier this year, the SEC raised minimum capital requirements for crypto platforms, slamming a N2 billion minimum balance on the platforms. Under the Investment and Securities Act (2025), digital assets are now classified as Securities, bringing crypto activities under capital markets regulation. In addition, the Nigerian government recently sought to include the crypto population in its new tax regime.

The Nigerian government recently ordered crypto platforms to mandate their users to include their tax identification number in their accounts. While P2P platforms have not been provided with a standalone regulation, they are now treated as a Digital Assets Intermediary and are expected to maintain a minimum capital of N500 million. In a case where crypto services mix with P2P services, then the burdens are expected to increase.

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