A Nigerian blockchain association, the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN) has released a self-regulatory guideline for crypto exchanges and other virtual assets service providers in the country. Titled the Code of Conduct for Virtual Assets Service Providers in Nigeria, the guideline is for both voluntary members and adopting non-members.

This is coming in the wake of a standoff between the federal government of Nigeria and crypto exchanges suspected of manipulating the foreign exchange market, especially Binance. Speaking on the relevance of the Code of Conduct guidelines, SiBAN president, Obinna Iwuno believes that the current situation has been made possible by a lack of regulation.

“The lack of regulation and structure has opened up our ecosystem and country for just anybody to walk in and operate. We have people operating in the sector without any form of licensing and aren’t indigenous organisations. Foreign organisations set up shop here without a registration, they start this business without a licence, and there is no regulation, to hold them accountable for anything. The other time it was FTX, Nigerians invested in FTX and lost their money. Who could fight for them? Nobody,” he said.

The document which was examined by Technext contains various codes, some of which deal with checkmating financial crimes such as the ones Binance is presently being accused of. For instance, Code 7 which covers the prevention, detection, and disclosure of financial crimes provides that “Persons engaged in virtual asset services should have appropriate systems, policies, processes, and procedures to ensure compliance with the applicable anti-money laundering and combating the financing of terrorism (AML-CFT) regulations in Nigeria.

It also provides that such crypto exchanges will adopt Know Your Customer (KYC) and Know Your Transaction (KYT) policies.

Code 11 which covers Corporate Governance and Resilience provides that: “Persons engaged in virtual asset services must have effective corporate governance arrangements and must take careful consideration regarding structure, strategy, procedures, and corporate culture. They must also be fully prepared for all possible contingencies to ensure minimal loss and disruption to customers, even in the event of the company winding down.”

Likewise, Code 12 which deals with Compliance with Regulation mandates that: “Persons engaged in virtual asset services should have appropriate systems, policies, processes, and procedures to ensure compliance with applicable regulations. These regulations may include data security and data privacy compliance, investments and securities compliance, AMF-CFT compliance, companies and allied matters compliance, employment law compliance, banking and other financial services compliance, and tax compliance.

SiBAN’s code of conduct for crypto exchanges

Speaking about the kind of message the SiBAN expects this document to send to the federal government, the president, Obinna Iwuno said the purpose is to let them know that the local digital assets exchanges have been carrying out their businesses with the best ethical and professional standards globally because of this code of conduct which is binding to every digital assets exchange and individual who is a member of SiBAN.

“We did this as a self-regulatory measure in the absence of a general regulation from the supposed regulator of this sector. This code of conduct covers every area that would enable customers’ and investors’ trust and confidence to be earned and also the national interest to be protected making sure that there is no sabotage to the economy nor is there a threat to security and the aiding of illicit financial flow,” he said.

Asked about concerns around enforcing compliance by the association, the president said the SiBan Corp has enforced compliance with the code of conduct on every member of SiBAN. He said now before you join SiBAN, an organisation first has to do their KYC, in which the only acceptable documents are government-issued documents. They are therefore verifiable and authentic legal identification recognized by the federal government and also issued by them.

“We have a policy and regulations office and a committee on that. We also have a standards and ethics committee whose responsibility is to deal with cases of default. So we have had compliance with this document and you cannot see anywhere in the news where local exchange has defaulted due to wrong practices,” he said.

Speaking about the possibility of government not recognising the code of conduct if and when it eventually decides to regulate the space, Obinna explained that there won’t be any regulation from the government if there is no self-regulation in the first place. He noted that citizens introduce and build sectors therefore they should define what the industry is and put measures and standards, structures and processes in place. What the government comes in to do is to implement and enforce. Government comes to give it legitimacy, it comes to give it legal backing.

“A system where you see a self-regulatory body comes to regulate an industry and then the government just wakes up and trashes it, it is tyrannical. It does not accommodate progress, it does not advocate for growth. There is nowhere that has led to any success or development in the world and I have never seen cases where that is happening anywhere in the world. So it is always a collaborative effort. That is why we are showing the government, look at what we have done. We are now asking you to come in and help us regulate the industry.

See also: Court orders Binance to share transaction details, names of Nigerian users with the EFCC