Crypto News

Nigeria Set to Regulate Digital Asset Platforms – What You Need to Know

Published by
Nonhlanhla P Dube
  • The Nigerian Securities and Exchange Commission (SEC) is preparing new industry regulations for digital asset platforms, with a focus on licensed digital exchanges that can list tokens based on assets such as equity, debt, or property.
  • Cryptocurrencies such as Bitcoin and Ether will not be among the assets authorized for listing, and the SEC will not register crypto exchanges until the central bank provides clear regulations for the crypto market.
  • Despite the ban on cryptocurrencies, Nigeria ranks second by search interest for the keyword “Bitcoin,” and the country has emerged as one of the most active countries in terms of adoption and curiosity about Bitcoin and other cryptocurrencies.

Nigeria is taking steps to regulate digital asset platforms, with the Nigerian Securities and Exchange Commission (SEC) considering new regulations that would allow licensed digital exchanges to list tokens backed by certain assets. The move is aimed at providing clarity for fintech firms operating in the country and to create a framework for the regulation of digital asset platforms.

Abdulkadir Abbas, the head of securities and investment at the Nigerian SEC, noted that the authority plans to only authorize listings of tokens based on assets such as equity, debt, or property. Cryptocurrencies like Bitcoin and Ether will not be among those assets. The aim is to register fintech firms as digital sub-brokers, crowdfunding intermediaries, fund managers, and tokenized coins issuers.

The new regulations would require license applicants to undergo a year of “regulatory incubation,” during which the SEC would study their operations and render their services in the country. After ten months, the SEC would determine whether to register the firm, extend the incubation period, or ask the firm to stop operations.

However, the SEC will not register crypto exchanges until the central bank provides clear regulations for the crypto market. The Central Bank of Nigeria had banned local banks from providing services to cryptocurrency-related platforms in early 2021. On the ban, the regulator cited high risks associated with trading cryptocurrencies such as Bitcoin. The central bank also promised to impose strict penalties for any lender or financial institution failing to comply with the directive.

Despite the ban, Nigeria has emerged as one of the most active countries in terms of adoption and curiosity about Bitcoin and other cryptocurrencies. According to data from Google Trends, Nigeria ranks second by search interest for the keyword “Bitcoin,” behind El Salvador, which adopted Bitcoin as legal tender in 2021. Other jurisdictions in the top-five crypto-curious countries list include Slovenia, Netherlands, and Switzerland. Nigeria was also among the top 20 countries in terms of crypto adoption in 2022, according to Chainalysis’ crypto adoption index.

While prohibiting cryptocurrencies, the Central Bank of Nigeria has been actively promoting its central bank digital currency known as the eNaira. The eNaira reportedly saw increased adoption due to national fiat reserves facing severe shortages. In November 2021, the central bank launched the eNaira, making Nigeria the first country in Africa to have a central bank digital currency.

The development of the eNaira is part of Nigeria’s broader efforts to reduce its dependence on the US dollar, which it uses to settle international trade. The central bank governor, Godwin Emefiele, has said that the eNaira will reduce the reliance on the US dollar and also promote financial inclusion in the country.

In conclusion, Nigeria is taking steps to regulate digital asset platforms, with the SEC considering allowing licensed digital exchanges to list tokens backed by certain assets. However, the SEC will not register crypto exchanges until the central bank provides clear regulations for the crypto market. Despite the ban on cryptocurrencies, Nigeria has emerged as one of the most active countries in terms of adoption and curiosity about Bitcoin and other cryptocurrencies. The central bank has been promoting the eNaira as a way to reduce dependence on the US dollar and promote financial inclusion in the country.

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Share
Published by
Nonhlanhla P Dube

Recent Posts

Tesla Unveils Refreshed Model 3 in North America with Exciting Upgrades

Model 3 Refresh: Tesla introduces a restyled Model 3 in North America, featuring a rear…

January 11, 2024

SEC Twitter Account Compromised, False Bitcoin ETF Approval Post Triggers Market Volatility

Unidentified individual accessed SEC's Twitter through a third party. Lack of two-factor authentication heightened vulnerability.…

January 11, 2024

Global Currency Markets Navigate Economic Uncertainties: Yen Weakens, Dollar Awaits U.S. Inflation Data

Japanese yen falls against the dollar and euro due to persistently shrinking real wages for…

January 11, 2024

Oil Prices Unmoved as Unexpected U.S. Inventory Build Raises Concerns

Unexpected Inventory Build: U.S. crude inventories unexpectedly grew, sparking concerns about weakening fuel demand and…

January 11, 2024

YanGuFang International Group Appoints Interim Executives Amidst CEO and CFO Detainment

Leadership Shake-up: CEO and CFO of YanGuFang International Group detained by Shanghai Police, prompting interim…

January 11, 2024

Cryptocurrency Market Analysis: SHIB, SOL, and ETH Navigate Challenging Terrain

SHIB breaches 200-day EMA, signaling bearish sentiment. Historical data suggests strong buyer reactions and potential…

January 11, 2024