Nigeria’s crypto sandbox hits its first wall as Quidax pulls P2P trading

Nigeria’s experiment with formally regulating cryptocurrency businesses has encountered its first visible constraint, after Quidax, a provisionally licensed digital asset exchange, discontinued its peer-to-peer (P2P) trading feature just five months after launching it.

The move comes as the Securities and Exchange Commission (SEC) tightens oversight of the crypto sector under its Accelerated Regulatory Incubation Programme (ARIP), a sandbox designed to transition exchanges from a largely informal market into Nigeria’s capital markets framework.

While Quidax framed the decision as a response to user preferences, the P2P exit highlights the practical limits of what regulators are currently willing and able to supervise.

Quidax informed customers via email that its P2P marketplace would be shut down, disabling ads, merchant chats and escrow services, while other products such as instant swaps and order-book trading would continue to operate.

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P2P trading has long been one of the most active and most controversial segments of Nigeria’s crypto economy. It enables users to buy and sell digital assets directly with one another, often settling transactions through bank transfers outside the exchange itself. That structure has made P2P platforms a crucial liquidity channel, but also a persistent regulatory headache.

In 2024, the SEC publicly raised concerns about P2P crypto markets, pointing to opaque transaction flows, difficulties in monitoring off-platform settlements, and risks of exchange-rate manipulation. The regulator also flagged the dominance of foreign P2P platforms operating in a legal grey area, complicating enforcement and investor protection.

Quidax’s P2P feature was positioned as a corrective to those risks. Rather than allowing trades to spill into informal channels, the exchange attempted to internalise P2P activity within a controlled environment. Only verified users could become merchants, with eligibility requiring full account registration, Level-3 know-your-customer verification, two-factor authentication, and a minimum participation history. Merchant applications were reviewed by Quidax, and approved traders were issued special badges.

Despite those safeguards, the feature has now been shelved, suggesting that even tightly controlled P2P models may sit beyond the regulator’s current comfort zone.

The timing of Quidax’s decision is significant. Startups admitted into the SEC’s ARIP programme, including Quidax and competitor Busha, were expected to transition to full crypto licences by August 2025, after completing the one-year incubation period. That process has since stalled, with the regulator pausing licensing approvals to reassess its supervisory readiness.

At the same time, Nigeria’s crypto rulebook is becoming more demanding. On January 16, the SEC raised minimum capital requirements for capital-market operators, including virtual asset service providers. Under the Investment and Securities Act (2025), digital assets are now classified as securities, bringing crypto activities firmly under capital-markets regulation.

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While the SEC has not issued a standalone framework for P2P platforms, the classification regime offers guidance. A P2P service could be treated as a Digital Assets Intermediary (DAI) or a Digital Asset Platform Operator (DAPO), both of which now carry a minimum capital requirement of N500 million ($352,000). Where services are stacked, combining P2P trading with exchange operations, custody, or escrow, the regulatory burden increases further.

For sandbox participants operating under close scrutiny, product complexity now carries regulatory risk.

Quidax’s P2P exit also provides insight into what Nigeria’s crypto sandbox currently permits. Activities that mirror traditional capital-market structures such as order-book trading, centrally settled swaps, and custodial services, appear easier for regulators to oversee.

P2P trading, by contrast, amplifies concerns around informal settlement, limited transaction visibility, and investor protection. Even when conducted on-platform, much of the actual value transfer occurs outside the exchange’s direct control, complicating supervision.

In that sense, Quidax’s decision marks the sandbox’s first clear boundary: innovation that cannot be cleanly mapped onto existing regulatory frameworks is likely to be deferred.

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The P2P shutdown also coincides with a broader tightening of Quidax’s platform. The exchange has announced plans to delist 35 crypto tokens, including meme coins, gaming tokens, and higher-profile assets such as Worldcoin and World Liberty Financial.

Taken together, the moves point to a strategic recalibration as Nigeria’s regulatory posture hardens. For exchanges seeking full licences, reducing exposure to high-risk or hard-to-supervise activities may now be a prerequisite for survival.

Nigeria’s crypto sandbox was designed to balance innovation with investor protection. Quidax’s P2P exit suggests that balance is being tested and that, for now, the regulator is prioritising visibility, control, and capital adequacy over the market’s most informal trading structures.

Royal Ibeh is a senior journalist with years of experience reporting on Nigeria’s technology and health sectors. She currently covers the Technology and Health beats for BusinessDay newspaper, where she writes in-depth stories on digital innovation, telecom infrastructure, healthcare systems, and public health policies.

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