Due to official limitations, much of Nigeria’s crypto industry is underground or peer-to-peer, and the country’s securities regulator is looking into measures to make investors safer.
In 2021, financial institutions operating in Nigeria will face a government crackdown on cryptocurrencies, beginning with the central bank’s infamous February ban on lenders that offer services to cryptocurrency exchanges. With the majority of the Nigerian crypto market being peer-to-peer by necessity, the country’s Securities and Exchange Commission (SEC) is now attempting to regulate the business and provide investors with greater protection.
According to a Sept. 2 report, the SEC has established a specialized fintech branch tasked with investigating crypto and blockchain investments and products – information that it can potentially include in a future crypto regulatory framework. Director-General Lamido Yuguda told Reuters this week that the agency is “closely monitoring this sector to see how we can develop laws that would assist investors in protecting their blockchain investments.”
Nigeria’s Securities and Exchange Commission, which states that all crypto assets “are securities, unless proven otherwise,” will be able to build a regulatory framework only after crypto is reintegrated into the country’s banking system. Additionally, the agency is apparently looking to collaborate with fintech firms to bolster the local securities market in order to deter capital flight, which continues to plague several sectors.
The asset class’s exclusion from banking channels has not diminished interest. On the contrary, despite a year marred by political and economic disasters, including social and economic repression and high inflation, crypto use has increased.
Additionally, the Central Bank of Nigeria (CBN) is teaming with a Barbados-based fintech firm as a technical partner for its proposed e-naira digital money, for which preliminary instructions were released in August. At a meeting of the country’s Monetary Policy Committee this spring in Abuja, CBN Governor Godwin Emefiele expressed his optimism that cryptocurrencies such as Bitcoin (BTC) would eventually become legal in the country but stressed that the government would do everything possible to prevent them from being used to finance illicit activities.
Also Read: Bithumb Exchange Prohibits Foreigners Without A Mobile KYC
Wallets