As more and more voices are being raised to call for regulation of the crypto sector, Nigeria is clearly keen to step up the crackdown on users of such assets. Indeed, Nigeria’s Securities and Exchange Commission (NSEC) has announced that it still does not consider cryptocurrency a digital asset. NSEC’s stance clarifies a law from last May that made it appear that cryptocurrency-related activities are allowed in the country. This makes the burgeoning crypto sector clearly a sector of illegality.
In Nigeria, crypto is not a digital asset
The collapse of the FTX exchange has led to a wave of calls for regulation of the crypto sector. The African continent, where crypto adoption is on the rise, is more than concerned, the IMF believes. This is clearly not the view of Nigeria’s Securities and Exchange Commission.
According to NSEC Managing Director Lamido Yuguda, as quoted by Bloomberg, cryptocurrencies are not included in its digital asset program. Nigeria’s Securities and Exchange Commission (NSEC) justifies this measure by the fact that crypto players do not have access to legal banking channels in its country.
On the other hand, Lamido Yuguda believes that excluding crypto from digital assets protects citizens. Indeed, for the Nigerian financial watchdog, crypto is very volatile and is only used for speculation. As long as there are no rules protecting investors, crypto will not be considered as digital assets, he continues.
We’re looking at digital assets that actually protect investors, not necessarily crypto… The commission’s job is to protect investors, not speculate.Lamido Yuguda, Director General of NSEC
However, Nigeria’s Securities and Exchange Commission (NSEC) is not ruling out any use of blockchain. The Nigerian financial regulator plans to explore the technology to advance virtual and traditional investment products.
Are crypto and digital assets really different? No, except in Nigeria
Although cryptocurrency and digital asset indicate the same thing to many people, that’s not what Nigerian regulators think. Indeed, a new regulation adopted last May gave digital assets the status of securities.
This new status gave players wishing to offer services related to digital assets, the opportunity to register with regulators. Thus, the fact that cryptocurrency is still not considered a digital asset in Nigeria keeps the sector illegal in the country.
As a reminder, Nigeria has been firmly fighting cryptocurrency since last year.
In February 2021, the Central Bank of Nigeria formally asked banks in the country to block the accounts of cryptocurrency users. Some Nigerians have even been arbitrarily arrested for making a crypto transaction.
To further shadow cryptomurrencies, the Nigerian central bank launched its own digital currency. More than a year after the introduction of the eNaira, Nigerians are less interested in this CBDC. However, interest in cryptocurrencies like Bitcoin is still growing.
A flourishing sector kept illegal
Repressive measures against cryptocurrency in Nigeria have not curbed its adoption. Nigerians have simply turned to non-state-controlled means. As a result, Nigeria accounts for the largest volume of P2P cryptocurrency transactions outside of the United States, according to Paxful, a crypto platform specializing in P2P exchanges.
It’s not the bear market that’s deterring Nigerians either. With the national currency continually plummeting in value due to inflation, Nigerians see crypto as a safe haven.
Perhaps the biggest loser in the crypto battle in Nigeria is the Nigerian economy. Indeed, the ban on crypto has led to a reduction in investment in the crypto sector which provides jobs and economic opportunities to millions of young people. Furthermore, the blocking of regulated crypto platforms has resulted in… the use of non-state controlled platforms. This has resulted in significant tax losses for the country, informs the OECD.
More than any other African country, Nigeria needs regulation of the crypto sector. The country has the highest adoption of crypto on the continent. It was also affected by the FTX collapse more than any other African nation. By denying cryptocurrency the status of a digital asset, Nigeria’s Securities and Exchange Commission (NSEC) is doing a disservice to the Nigerian economy. The financial watchdog is also failing to protect its citizens…
I dream of a world where every citizen has total control over themselves, including their finances. I believe that Bitcoin is one of the tools that will achieve this revolution. Since 2019, I am learning about this cryptocurrency and spreading the word around.