In part due to legislative restrictions, Nigeria’s crypto sector operates primarily underground or on a peer-to-peer basis, and the country’s securities regulator is investigating methods to make investors more secure.
Nigerian financial institutions have been the focal point of a government-sponsored cryptocurrency crisis in 2021, which began with the controversial central bank ban on bankers selling cryptocurrency services in the country in February. The issue has now spread to other African countries.
Because the majority of the Nigerian cryptocurrency market is de facto peer-to-peer, the Securities and Exchange Commission of the country (SEC) is now attempting to maintain control over the business and provide investors with greater protection.
According to a report published on September 2, the Securities and Exchange Commission has formed a specialized fintech section to examine crypto, blockchain investments, and products—information that may be incorporated within a future regulatory crypto framework.
According to Reuters, Director-General Lamido Yuguda stated this week that “the Agency is actively monitoring this business to determine how laws may be established to assist investors in securing blockchain-based assets.”
A regulatory framework for crypto assets would only be able to be established after cryptography is re-integrated into the country’s financial system, according to the Nigerian Securities and Exchange Commission, which believes that all crypto assets are “safe unless otherwise demonstrated.”
Additionally, the Agency is believed to be collaborating with fintech companies to improve the local securities market to avoid the flight of money that has been affecting some enterprises for some time.
The absence of banking channels in the asset class did not dampen interest in the asset class. In reality, despite a year that has been filled with economic and political problems, such as social and economic repression and widespread inflation, the use of encryption has increased in recent years.
As part of its planned e-naira digital currency, according to preliminary instructions issued in August, the Central Bank of Nigeria (CBN) would cooperate as a technical partner with a Barbados-based fintech to develop the technology.
Governor Godwin Emefiele of the Central Bank of Nigeria (CBN) expressed his optimism that cryptocurrencies such as Bitcoin (BTC) would eventually become legal in Abuja during a meeting of the country’s Monetary Policy Committee in the spring of this year, but he stressed that the government was doing everything possible to prevent it from being used to finance illicit activities.