Nigeria is a hotspot for cryptocurrency transactions with crypto trading platforms like Kucoin and Paxful recording high transaction volumes from Nigeria.
The Central Bank of Nigeria (CBN) on the 7th of February 2021 in a bid to ensure accountability and regulation placed a restriction on cryptocurrency in Nigeria, warning commercial banks to desist from transacting in cryptocurrencies and with entities dealing in cryptocurrencies.
The Securities and Exchange Commission (SEC) on the 15th of May 2022 released a new set of Rules-on-Issuance-Offering-and-Custody-of-Digital-Assets essentially legalizing digital assets such as cryptocurrencies in Nigeria and classifying them as Securities regulated by the Commission. These rules appear to be a fulfilment of the Commission’s declaration to ensure regulation of innovation in the cryptocurrency sector. What this means for Nigeria is that the use of digital assets is now allowed provided the issuer(s) of these assets have tendered their application and they and their assets are duly registered with the Commission.
The regulation of the SEC is a good step in the right direction as it ensures investor protection, accountability and proper oversight of the cryptocurrency and other digital assets sector. However, there are questions left unanswered with the issuance of the new guidelines such as Whether the CBN is onboard and will reverse its earlier directive mandating banks to terminate accounts connected to digital assets and if adequate safety measures have been put in place to tackle associated risks in digital assets trading.