Co-founder and Chief Operating Officer of Busha, Moyo Sodipo, says Nigeria’s inclusion in the Financial Action Task Force’s (FATF) grey list has been a persistent stumbling block affecting cross-border transactions.
Nigeria was placed on the FATF grey list in February 2023 due to rising capital inflows and shortcomings in combating money laundering, terrorism and arms financing.
The grey list, also known as the “Jurisdictions under Increased Monitoring” list, is a list of countries that the FATF says have a higher risk of money laundering and terrorism financing. The grey listing signifies increased monitoring and can lead to higher compliance costs and more scrutiny for businesses operating in or with Nigeria.
In February, the CEO of NFIU, Ms. Hafsat Bakari, says Nigeria is expected to exit the FATF grey list by late 2025.
While this is yet to come into fruition, Sodipo, in this interview with Naijaonpoint, speaks to many issues around the crypto ecosystem, including cross-border payments.
Naijaonpoint: Looking back this one year, what would you say has changed or what has remained unchanged?
Moyo Sodipo: I would say it’s been a year of learning. It’s been a year of collaboration. It’s been a year of understanding as well.
What has changed? The first thing I’ll say has changed is finally we are able to once again access the formal banking network in Nigeria.
So, prior to 2021, we had bank accounts that were operating when the CBN placed the restriction on individuals and entities affiliated with crypto in 2021. That was distorted. After the licensing last year, we’re now seeing the green light again where banking institutions, financial institutions that were somewhat scared in the past of working with us are now happy to welcome us into their offices again.
And it’s a nod in the right direction where we no longer have to be in the shadows. Like you said, we no longer need to be using P2P or different innovative models to walk around the roadblock that the restriction caused. But now we’re able to come out with our full chest and educate people and provide crypto and digital asset services to Nigerians.
Naijaonpoint: How has this reshaped the way you engage with your users? I’m sure a couple of things must have changed.
Moyo Sodipo: Yes, yes, definitely. So, a couple of things have changed. For example, with our users today, we’re able to put our hand on our chest 100% and say anywhere you go, let them know you’re dealing with a licensed player in the space. And what this means is in the past, if a user had issues, they didn’t have anyone to run to and say, hey, help me with this issue.
Or if a user was confused, they didn’t have any regulator. A couple of people that just wanted to deal with crypto or digital assets did not have any regulator that they could run to and say, in this regulator world, these guys are accountable. But today, it’s indicated on our website, on our mobile application, that you’re licensed by the SEC.
So, what this means is it has boosted user confidence where if there’s any issue, if there’s any confusion, if there’s any doubts, they can easily send a message to the SEC. They can easily send an email to the SEC to verify our legitimacy. And the SEC will also respond to them and also let us know that, okay, the SEC customer said they need a clarification on this.
And there’s full transparency. So, for customers, it has boosted their confidence that they have the regulator behind them, and their funds are secure.
And every transaction that they are doing on our platform, they know that it is lawful in the eyes of the law.
And every transaction that they are doing on our platform, they know that it is lawful in the eyes of the law.
Naijaonpoint: Is there a similar change with your partners and the regulators? I mean, what has changed in dealing with them?
Moyo Sodipo: In terms of the regulators, before we were just operating in the wild west, now we have reports where we send to the SEC about trades. We have calls with them every now and then.
In fact, we’ve had instances where we collaborated with the SEC last year. I think that was in October last year. There was an Investor Week or so, where we were also invited by the SEC to be part of that week-long program.
So there’s been constant collaboration both on their side and our side as well.
What we have is constant collaboration with players in the space where they’re learning from us, we’re learning from them as well. And what the long-term goal for us and for them as well is ensuring that all participants are protected, all participants have confidence in this new and evolving industry.
Naijaonpoint: Some critics argue that regulation can stifle innovation. How has Busha balanced regulatory compliance with the need to remain innovative in product development?
Moyo Sodipo: I’d say from day one, even before the formal licensing, Busha has always been compliance-based in the sense that we’ve always done global-grade KYC. We’ve built our systems in such a way that if the regulator decided to come in the middle of the night and say, hey, we’re not regulating you, but tomorrow you need to be regulated, we already have systems in place.
So regulatory clarity coming last year was more of a tick on the box for us because prior to that, from 2018 when we started building, we already had all these processes in place, we already had the systems in place to ensure that we’re not operating in a way that when regulation comes, it affects the business. So, there was no drastic change into the process between our customers. There was only improvement into the processes.
Even when we didn’t have a license from the SEC, we were doing KYC, we already had KYC, we already had transaction monitoring tools that multiple exchanges use globally. We already had KYC processes that were acceptable by regulators, not just in Nigeria, but also other jurisdictions globally. So the regulator in Nigeria giving us that nod was also on our side.
We saw it as some sort of testament to the groundwork that we had done prior to them coming to regulate us. And for our users also, there was no drastic change for them. So it was not like a case of them feeling like the SEC started regulating us and then we made their lives more difficult. No, it was still the same thing. The only difference is the processes became better. It became more improved.
Now they have access to direct banking accounts unlike before where they had to jump maybe two, three hoops. Instead of making a deposit and jumping one, two, three hoops that they were doing in the past, now they can make a direct bank withdrawal from their wallets to their bank accounts. They can use their crypto.
They can deposit crypto or digital assets in minutes as well. The transaction process used to take five, 10 minutes in the past. Now we’ve been able to cut that down to 30 seconds to two minutes, barring any unforeseen circumstances from the general banking network.
Naijaonpoint: What role do you see exchanges like Busha playing in deepening financial inclusion and attracting more Nigerians into the formal crypto economy?
Moyo Sodipo: For players like us, over the next couple of months and next year, our core focus is being able to let people see crypto beyond just speculation, beyond something that there’s this notion with crypto that, it’s gets rich quickly. You put one dollar today, by next week you get another.
That’s the main reason why initially before price regulation, there was a lot of stigmas or a lot of bad notion that people lose money there because a lot of people just use crypto to promise unrealistic returns, unrealistic benefits that people don’t even sit down and think twice.
For us, it’s about educating the users to let them know that you can apply crypto to your daily life. You can apply digital assets to your daily life and also sort of incorporating it into things that you apply.
Today if you’re trying to buy airtime, we want you to be able to do that directly from your digital assets. You’re trying to pay for something at the grocery store, we want you to be able to do that directly from your digital assets. You see that this digital asset or this cryptocurrency that you are holding, you don’t necessarily need to think it is arbitrary. It’s something that you can use to go to spa and say, I don’t have money around me, I have crypto, I have digital assets, and you’re able to find a way. We find a way for you to just pay directly with your crypto at that location.
And eventually we’ve managed to be able to partner with other traditional players in the space, other traditional players in the stock market and see a way where there can be some sort of synergy between digital assets and the traditional stock markets. That way, even normal people that are buying traditional stocks will now be able to buy cryptocurrencies just using our platforms with one or two integrations with traditional players.
Naijaonpoint: Talking about partnership, you’re partnering with the SEC and Cambridge University for an executive course. What impact do you think this initiative will have in shapping the cryptocurrency ecosystem in Nigeria?
Moyo Sodipo: Yes. If you recall, I mentioned the fact that we need to educate a lot of people. So there are two aspects of education.
There’s educating the general public, there’s educating the consumers and there’s also the aspect of educating the decision makers, educating the regulators and the like. This executive program is targeted at educating those that we believe will be very, very pivotal into how digital assets are shaped over the next couple of years.
We want to get to where regulators or key executive leadership in different institutions, different walks of life are able to get first hand knowledge on what digital assets are about.
We want to, with this executive course, lay the foundation where different executives and leaders in Africa are able to pass through this course and realize or understand what digital assets are about, understand how to navigate it, understand the entry cases and pretty much go back to their day to day lives and be able to say, okay, I’ve learned something that’s true.
Digital assets is not something that’s negative. It’s something that we can find a way to incorporate into our own businesses and see how we’re not left out of the future of finance.