Nigeria announces plan for cryptocurrency regulations

This is another step towards providing regulatory clarity to crypto in the country

The Nigerian Federal Ministry of Finance announced yesterday that it will be collaborating with the country’s Securities and Exchange Commission (SEC) to regulate cryptocurrencies in the country. This was revealed in Lagos during the “Fintech in Nigeria: State of Play” conference that was organised by The Economist Intelligence Unit and Mastercard.

Armstrong Takang, the Special Adviser on ICT to the Minister, spoke at the event and explained that the Nigerian government is looking at opportunities that are available in crypto and blockchain adoption, which will create regulations that will benefit all stakeholders involved.

On 14 September, the Nigerian SEC formally classified crypto assets as securities and listed crypto trading as a regulated activity under the rules of the SEC. While this announcement marked the first time in history that a Nigerian financial regulator adopted a clear stance regarding cryptocurrencies, it did not represent the full regulation of the space since there was no input from the Central Bank of Nigeria (CBN).

This announcement was welcomed by many who were hoping for the Nigerian government to fully acknowledge and legalise the use of crypto assets.

With regards to the planned partnership between the Finance Ministry and the SEC, Takang added that the cross border implications of crypto usage have the Finance Ministry reaching out to the Ministry of Industry and Trade, and the Nigerian Customs as well.

Nigerians are pressured to stay afloat in an economy that is restricted by capital controls, forex shortages and a 33 per cent black market exchange rate. This has made Bitcoin and other cryptocurrencies as a viable solution for many citizens.

Even without the CBN providing regulatory clarity, crypto exchanges like Binance and BuyCoins Africa have already managed to build banking relationships with several financial institutions that are regulated by the CBN, which eliminates the need for Nigerian users to purchase crypto with US dollars.

These partnerships have given Bitcoin the leverage to become the de facto foreign exchange instrument for Nigerian citizens who wish to carry out international trade or transfer their funds out of the local naira (NGN).

“With CBN being one of the key stakeholders in the proposed blockchain adoption strategy, I do not think that CBN will eventually introduce a policy or regulation that is not aligned with the principles and strategies in the proposed document. Besides, CBN, through its representative at the stakeholder engagement, indicated its readiness in principle to provide regulatory support”, Paul Ezeafulukwe, the President of the Stakeholders in Blockchain Association of Nigeria, explained.