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.
Financial institutions operating in Nigeria have been the focal point of a government crackdown on cryptocurrencies in 2021, beginning with February’s infamous central bank ban on lenders supplying services to crypto exchanges in the country.
With the majority of the Nigerian crypto market being de facto peer-to-peer, 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 into a future crypto regulatory framework.
Director General Lamido Yuguda told Reuters this week that the agency is “closely monitoring this market to determine how we can develop regulations that will assist investors in protecting their blockchain investments.”
The Nigerian Securities and Exchange Commission, which believes that all crypto assets are “security, unless proven otherwise,” will be able to develop a regulatory framework only after crypto is reintegrated into the country’s financial 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.
According to preliminary guidelines released in August, the Central Bank of Nigeria (CBN) is also teaming with a Barbados-based fintech as a technical partner for its proposed e-naira digital currency.
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.
