Nigerian Fintechs Cut Off From Government Verification Service

In brief

  • The Nigerian government suspended fintech companies from an identity verification system.
  • Analysts told Decrypt it’s likely related to the government’s desire to streamline identity verification.
  • But without a functioning alternative, fintechs can no longer take on new customers. That’s an additional hurdle for crypto companies.

Nigerian fintech companies were on Friday suddenly cut off from a government service they need to perform mandatory identity checks on their customers.

While they wait for the government to install a revamped identity system, fintech companies can’t legally onboard new customers or switch to services that don’t require identity checks, such as peer-to-peer services, analysts told Decrypt.

“The timing of this move couldn’t be worse, especially given all the recent regulatory obstacles that fintech has faced this year, like the ban on banks dealing with crypto,” Oluwaseun Opeyemi, a lawyer in Nigeria’s capital Lagos, told Decrypt.

The sudden blackout adds yet another hurdle for crypto companies and forces them to move to services that don’t require identity verification, such as peer-to-peer. “Not very encouraging signs for foreign investment in Nigeria,” said Opeyemi.

Switching off the lights

Like so many other countries, Nigerian law requires fintech companies to verify their customers’ identity.

To do so, businesses in Nigeria rely on the government’s seven-year-old verification database, the BVN, or Bank Verification Number.

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But a regulatory directive on Friday suspended fintech companies’ access to the BVN without warning.

The government hasn’t explained why, but it’s likely because the government is replacing its patchwork network of identity systems, of which BVN is just one part, explained Olaleye Oladimeji, an associate at the law firm Aliant Law and a blockchain fellow at Kleros.

In its place will come a slicker identity system, the National Identification Number (NIN).The NIN functions like America’s Social Security Number (SSN) and consolidates all identity information into one handy number.

But in its attempt to streamline verification, the government has left fintech companies high and dry. A lot of people haven’t switched to the new NIN system and fintech companies don’t have the tools to query the new database.

It leaves fintech companies in a tough place, said Danny Oyekan, CEO of crypto investment firm Dan Holdings and social payments app Coins App. “How do startups verify the identity of their users without the BVN verification?”

To remain compliant, Nigerian fintech companies could return to expensive identity verification methods that predated the BVN, said investment analyst Oluwaseun Esq, such as checking information through with other institutions.

“And those are cumbersome methods, imposing additional costs on fintech businesses and their customers.”

Until the shiny new system takes off, fintechs must wait. And crypto companies, already struggling under Nigeria’s directives against them, will likely have to wait even longer.


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Coinbase Could Add These 4 Crypto Assets Soon, Says Tyler Swope

US-based crypto exchange Coinbase could be adding four new crypto assets to its growing list of supported coins soon, according to influencer and trader Tyler Swope.

In a new video, Swope tells his 222,000 YouTube subscribers that the red-hot decentralized video delivery network, Theta Network (THETA), has been on Coinbase’s radar since July 2020.

The crypto influencer highlights a tweet from Steve Chen, Youtube co-founder and core advisor of Theta Network, who recently congratulated the team behind Origin Protocol (OGN) for its recent Coinbase listing. Swope says that Chen’s connections in Silicon Valley might just do the trick to get THETA added to the crypto exchange.

“So him congratulating Origin, tweeting it, is a sign to me that Theta might have been in talks with Coinbase, too. He’s a little jealous, but his new company’s time will come soon, especially with how connected they are. My guess: this month.”

Another coin that could be added to Coinbase according to Swope is Kadena (KDA), a blockchain platform that features interoperable private and public networks. The crypto trader looks at Rosetta, an open-source project led by Coinbase that offers a set of tools that facilitate blockchain integration. Swope says that out of the 10 blockchain teams that support Rosetta, only Celo and FIlecoin (FIL) have been listed on the exchange. But he says that could change soon.

“Now what’s interesting to me, Filecoin and Celo were both pulled from an exploring asset blog post all the way back in September of 2019. Who else was included in that exploring post? Many of the assets also on Rosetta: Coda, Handshake (HNS), Kadena, Near, and Oasis. My guess, a soon to be addition is going to be one of these, the one that is the most ready. Who is that? Well, who was the first to deploy with the Rosetta API when launched? 

Kadena did by dropping their blog, ‘A First Look on Integrating With Rosetta, Launched by Coinbase.’”

The third coin that could soon be added to Coinbase says Swope is a blockchain protocol that aims to reinvent the allocation of top-level internet domains: Handshake (HNS).

“They were the second to deploy and be live with Rosetta, open-sourcing it two days later, June 19th. Handshake’s price chart [is also] similar to Theta and Kadena’s, especially lately.”

The last coin that could soon be added to Coinbase says Swope is lossless lottery PoolTogether (POOL).

“Through the process of elimination, through WalletLink, yes there is a likelihood of POOL eventually being added to the base. They have a token. They have an investment from Coinbase, and they are one of the projects using the WalletLink.”

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Solana (SOL) price rises as airdrops attract new users to the network

Over the past six months blockchain projects that have issued token airdrops have re-emerged. Most notably, the airdrops by Uniswap (UNI) and MEME will be remembered as recipients were rewarded with gains ranging from $20,000 to $600,000 simply for holding the tokens.

One Ethereum (ETH) competitor that has seen numerous projects launch with airdrops in the past three weeks is Solana (SOL), an open-source project that focuses on utilizing blockchain technology to provide decentralized finance solutions.

While Solana isn’t explicitly making a concerted effort to launch these projects, the protocol’s main decentralized exchange Serum (SRM) was responsible for the recent COPE airdrop which distributed 2,000 tokens to users who participated in the joint DeFi hackathon held by Solana and Serum.

After the airdrop, COPE eventually listed on Serum for $0.50 on March 30 and the price of the token surged to a high of $5.43 on April 11, rewarding holders with a $10,860 reward.

SOL/USDT 4-hour chart. Source: TradingView

The success of the COPE airdrop prompted a series of token launches and airdrops with similar-sounding names including HOPE, ROPE and KOPE, whose launches on the Solana blockchain have coincided with a 55% rise in the price of SOL since the start of April.

Airdrops on the network may have played a small role in the recent price appreciation due to users needing SOL to receive airdropped tokens but this is not possible to ascertain based on the available data.

Interactions on the Solana blockchain, including the addition of new tokens to the Sollet wallet, require small amounts of SOL to complete the contract executions. Thus, users rushing to sign up for airdrops before they filled up would have needed to purchase SOL and fund their wallets in order to create new addresses for the airdropped tokens.

Analysts expect the airdrop trend to continue

For those worried that they missed out or that the ‘airdrop season’ is over, a recent tweet from Solana’s Twitter feed suggests that the Solana ecosystem is just getting started, meaning the likelihood of future airdrops remains high.

New users are the lifeblood of successful blockchain networks, and the use of airdrops continues to be one of the most utilized methods for drawing attention to fledgling projects and sapping liquidity from one protocol to another.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.