Nigeria to Regulate Crypto: SEC Set to License Exchanges Amidst Growing Adoption

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As an analyst with over two decades of experience in global financial markets, I’ve witnessed the rapid evolution and expansion of various industries, particularly fintech. The latest development in Nigeria’s crypto market is a significant leap forward for this West African nation, and it’s heartening to see a regulatory body like the SEC take decisive steps towards fostering a structured digital asset ecosystem.

In recent times, the cryptocurrency sector in Nigeria has experienced rapid expansion, yet it seems that so far, no regulations have been implemented. However, a recent report by Bloomberg hints at potential changes indicating that regulation might soon become a reality.

Based on the report, it appears that Nigeria’s Securities and Exchange Commission (SEC) is taking steps to manage the growing digital currency market, as the use of digital assets expands across the country.

Digital Asset Regulation In Nigeria: A New Era?

According to Bloomberg’s report, it appears that the regulatory authority located in Abuja is set to release licenses for virtual asset providers such as cryptocurrency exchanges by the end of this month. The head of this body, Emomotimi Agama, made this announcement.

The Securities and Exchange Commission aims to establish a venue for individuals to perform these tasks officially, ensuring we have all necessary data at hand. … It’s crucial to empower our nation’s young generation to reap the advantages fintech has to offer.

As West Africa sees a surge in cryptocurrency-related actions due to its tech-inclined youth seeking to capitalize on fintech opportunities, this decision to regulate cryptocurrencies arises as a necessary response.

The SEC’s undertaking forms part of a wider strategy aimed at bringing Nigeria’s regulations on digital assets in line with those of international territories that have previously established such frameworks for these assets.

The SEC Director-General Agama highlighted the importance of supporting the country’s youth in leveraging the benefits of fintech, noting that the market size is substantial and continues to grow.

According to findings from Chainalysis and a report by Bloomberg, it’s clear that the use of digital currencies in Nigeria has significantly grown. This growth is particularly noticeable in the transaction volume, which surged by 9% to reach an impressive $56.7 billion in June 2023.

Yet, Agama contends that this number likely reflects just a small portion of the real market action, as numerous trades are not recorded.

Nigeria’s Backstory With Cryptocurrency

In similar fashion to other areas, Nigeria has a significant background of regulating the cryptocurrency sector. For instance, in the year 2021, the Central Bank of Nigeria (CBN) made it clear that financial institutions within their jurisdiction should not process any transactions related to cryptocurrencies.

The decision taken by the Central Bank of Nigeria, due to worries over potential manipulation of the Naira – the nation’s currency, ignited a string of debates within the cryptocurrency community in the country.

In February 2024, despite ultimately discovering a workaround, the Nigerian administration intensified its efforts to restrict Binance, the most commonly used digital currency exchange in the region.

The leaders at Binance were accused of participating in activities that potentially worsened the value of the Nigerian Naira, through speculation, and neglecting their tax obligations.

As a passionate crypto investor in this country, I’ve noticed that despite the ongoing crackdowns, our crypto community shows remarkable resilience. Adoption is growing steadily, and we continue to find innovative ways to navigate around the government’s restrictions on our cherished industry.

Nigeria to Regulate Crypto: SEC Set to License Exchanges Amidst Growing Adoption

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2024-08-21 04:42