Nigeria to Introduce Bill That Recognizes the Use of Cryptocurrency

An amendment to the 2 Investment and Securities Act of 2007 will allow cryptocurrency use in Nigeria.

Human next to stacks of crypto coins on green background
  • Nigerian lawmakers are drafting legislation allowing cryptocurrency use.
  • If passed, a new bill will clearly define the SEC and CBN’s regulatory responsibilities.
  • Earlier, the SEC released guidelines on issuing, offering, platforms, and custody of digital assets.
  • Since the announcement of the Central Bank of Nigeria in 2021, cryptocurrency has been illegal in the country. The CBN argued that crypto facilitates illegal transactions, money laundering, and terrorism financing.

The legislative arm of the Nigerian Government is working on a bill that will allow the usage of cryptocurrency in the country, revealed the Chairman of the House of Representatives Committee on Capital Markets and Institutions, Babangida Ibrahim. According to a recent report from local media, the lower chamber of Nigeria’s legislative arm, the House of Representatives, will pass the law soon. 

The usage of cryptocurrency in the most populated African nation will come into effect after the amendment of the Investment and Securities Act, 2007. With the amendment, the Nigerian Securities and Exchange Commission (SEC) will recognize cryptocurrency as capital for investment. 

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Additionally, the bill will create a clear-cut definition of the regulatory responsibilities of the Central Bank of Nigeria and the SEC. As reported, Ibrahim emphasized why Nigeria must follow the growing global trend of regulating cryptocurrency.

However, the bill will not be the first attempt of the Nigerian Government to regulate cryptocurrency. Early this year, the SEC released guidelines on issuing, offering, platforms, and custody of digital assets. Nevertheless, there is still a need for a clear-cut regulation to vividly state the roles of the SEC and CBN in regulating the industry in Nigeria.

On numerous occasions, the CBN has strongly opposed cryptocurrency in Nigeria. In its defense, it argued that cryptocurrency would facilitate illegal transactions, money laundering, and financing terrorism.

Cryptocurrency has been illegal in the country following the announcement of the CBN in 2021, though there is no legal backing for it. Further, the apex financial institution ordered banks not to facilitate cryptocurrency transactions and told them to block accounts of identified persons and organizations engaging in cryptocurrency transactions. 

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The CBN introduced the virtual version of the Naira to rival cryptocurrency in Nigeria. However, the eNaira is struggling to receive due acceptance by Nigerians, and its adoption rate is at 0.5% a year after the CBN introduced it.

On the Flipside

  • Despite opposition, there are no laws in the country that ban the use of cryptocurrency in Nigeria. Currently, cryptocurrency exchanges like Binance operate in the country and allow users to deposit the Nigerian Naira. However, users must go through some KYC processes before using the platform.

Why You Should Care

Approximately 22 million Nigerians own cryptocurrency, more than 10% of the population. Babangida Ibrahim’s announcement may be a welcome move from the government that will bring digital assets back under comprehensive regulation after they were banned last June.

 

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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Soumen Datta

Soumen has been a dedicated researcher and writer in the field of cryptocurrencies for the last few years. Even though Indian crypto regulations are still unclear, he believes that India will continue to innovate in the years to come. He loves to play his guitar and sing along in his spare time. He holds bags mostly in BTC, ETH, BNB, MATIC, ADA.