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Nigeria Seeks to Legalize Crypto as Investment Capital

source-logo  financemagnates.com 19 December 2022 10:47, UTC

Nigeria’s House of Representatives will soon pass into law a bill that legalizes digital assets as capital for investment, Babangida Ibrahim, the local chamber’s Chair for the Committee on Capital Market and Institutions, told local media The PUNCH.

Ibrahim said the Investments and Securities Act 2007 (Amendment) Bill has scaled second reading in the lower chamber and will permit, upon passage and signing into law, the Nigerian Securities and Exchange Commission (SEC) to recognize cryptocurrency as capital for investment.

The Bill, which seeks to establish the Nigeria SEC as the apex regulatory authority of the Nigerian capital markets, will also define the roles of Nigeria’s apex monetary authority, the Central Bank of Nigeria, in relation to cryptocurrencies. Furthermore, the
Bill is one of several amendment proposals before the House seeking to make reforms to the country’s capital markets including derivatives and commodity exchanges regulation.

A U-turn?

The new development comes seven months after the SEC recognized crypto as securities and issued new rules on the issuance, offering, and custody of digital assets.

However, Nigeria’s CBN is yet to announce a reversal of its implicit ban on cryptocurrencies. In February last year, the apex bank ordered commercial banks in the country to close down accounts of cryptocurrency traders in the country. To enforce this order, the authority earlier this year slapped an N814.3 million fine (nearly $2 million at the time) on four commercial lenders for allowing cryptocurrency transactions.

However, Ibrahim told the domestic outlet that the lower chamber’s action “is not about lifting the [CBN’s] ban” but assessing the legality of cryptocurrencies within the country’s legal framework. The legislator clarified that digital assets due to their border-less nature “are not within the jurisdictions of the CBN”. He added that Africa’s largest economy and most populous nation also needs to be “up to date [with] global practices.”

Check out this recent Finance Magnates London Summit 2022 session on what will define fintech regulation in 2022.

A Top Crypto Adopter

Despite Nigeria's unfavorable disposition towards cryptocurrency, the African nation is still one of the fast-growing markets in terms of cryptocurrency adoption. According to Chainalysis’ 2022 Global Crypto Adoption Index Top 20, Nigeria ranks 11th overall, just behind China, in terms of crypto adoption.

Meanwhile, across Africa, not all countries are open to cryptocurrencies. While 4 African countries, Algeria, Egypt, Morocco and Tunisia, have placed an absolute ban on cryptocurrency, 19 countries have placed implicit restrictions on digital assets. However, in Kenya in East Africa, lawmakers are debating a new bill that seeks to tax crypto exchanges, digital wallets, and individual transactions.