Nigeria plans to officially recognize cryptocurrencies with the 2025 Nigerian Investment and Securities Bill, which awaits the president’s approval. This new legislation seeks to update outdated laws, define crypto assets, and modernize regulatory frameworks in response to the growing fintech sector. It also includes measures to protect investors against fraud and enhance capital market practices.
Nigeria is poised to officially recognize cryptocurrencies through the impending enactment of its 2025 Nigerian Investment and Securities Bill. This legislation, awaiting President Bola Tinubu’s approval, will replace the outdated 2007 law. It defines crypto assets as “a digital representation of value that can be transferred, digitally traded and used for payment or investment purposes,” while excluding digital fiat versions.
The path to this legislative change has been tumultuous, initially marked by governmental concerns regarding the rapid adoption of cryptocurrencies following the 2015 oil price collapse, which significantly devalued the naira. As many Nigerians turned to cryptocurrencies as a secure alternative, the demand paradoxically exacerbated pressure on foreign exchange markets, positioning Nigeria as the second largest holder of cryptocurrencies globally.
In response to these developments, the Central Bank of Nigeria (CBN) directed banks to sever ties with cryptocurrency trading, prompting traders to shift to peer-to-peer transactions via platforms like Binance. Under the current administration led by President Tinubu, there have been mixed signals regarding cryptocurrency regulation, culminating in a crackdown on Binance amidst allegations of financial malfeasance.
The Nigerian Securities and Exchange Commission (SEC) has endeavored to address regulatory gaps amid these challenges, leading to the formulation of updated legal frameworks aimed at modernizing Nigeria’s capital market practices. Chairman of the Senate Committee on Capital Markets, Osita Izunaso, noted the new legislation’s potential to enhance investment opportunities within the Nigerian capital market.
The rise of fintech companies offering diverse investment services has been a primary catalyst for these regulatory updates. Companies like PiggyVest and Cowrywise provide retail investors with higher returns through debt instruments. The new legislation seeks also to establish a framework for commodities trading and a futures market, promoting investment in a broader array of assets.
Moreover, the SEC has been actively combatting investment fraud, launching an initiative to alert the public to dubious schemes. The revamping of regulatory powers allows the SEC to pursue rigorous actions against Ponzi schemes, while expanding the Investor Protection Fund to safeguard against losses incurred from brokerage failures, as highlighted by SEC Director General Emomotimi Agama.
Aggressive legislative action aims to manage risks for investors effectively, and concerns have been raised regarding the SEC’s regulatory authority over financial institutions typically monitored by monetary authorities. Regardless, the new bill represents a significant step toward establishing a sophisticated capital market in Nigeria, a necessity for the country’s economic diversification efforts.
In summary, the impending passage of the 2025 Nigerian Investment and Securities Bill signifies a pivotal transition for cryptocurrency regulation in Nigeria. With a focus on mitigating investor risks, enhancing regulatory frameworks, and modernizing capital market practices, this legislation aims to foster a conducive investment atmosphere. Despite some tensions between financial regulatory bodies, the overall objective is to support a diversified and robust Nigerian economy.
Original Source: african.business
