Nigeria’s Committee on Capital Markets and Institutions Chairman Babangida Ibrahim has filed two reports on proposed bills to restructure the country’s capital markets. He said that new legislation that was going to be passed by the House of Representatives would legalize cryptocurrency usage across the board in Africa’s largest economy. Cryptocurrencies and also other digital assets would be considered “capital for investment” by Nigeria’s Securities and Exchange Commission under the Investments and Securities Act, 2007 (Amendment) Bill. It will outline the SEC and CBN’s crypto regulatory roles.
A bill for a law repealing the Chartered Institute of Stockbrokers Act, Cap. C9, Laws of the Federation of Nigeria, 2004, and enabling the formation of the Chartered Institute of Securities and Investments, as well as for related matters, was the title of the first proposed bill. While a bill for legislation to get rid of the Investments and Securities Act of 2007 and put in place the Investments and Securities Bill to make the Securities and Exchange Commission the top regulatory body for the Nigerian capital market and to regulate the market to make sure that capital is raised, investors are protected, the market is fair, efficient, and transparent, and systemic risk is reduced, is the second.
The country needs to include digital assets and others in the new act.
Before now, the CBN had instructed financial institutions such as banks and others to track down and close any accounts belonging to people or organizations running cryptocurrency transactions. At the time, the central bank claimed cryptocurrency exchange and payment facilitation were illegal. Ibrahim said that Nigeria needed to stay up with economic innovation on a global scale. He said Nigeria needs a robust capital market and must follow global practices to do that. Digital currencies, commodities exchanges, and other important innovations in the financial market need to be included in the new act.
According to Ibrahim, the classification of digital currencies varies depending on the jurisdiction. However, these currencies do not acknowledge territorial boundaries. It’s possible to remain in Nigeria and invest in the U.S., Canada, or elsewhere. Their nature is digital. Therefore, the Central Bank of Nigeria (CBN) found that many cryptocurrency investors do not even have accounts in the country. Because of this, they fall outside of the CBN’s purview. The CBN cannot monitor them since they aren’t using local accounts.
Only 0.5% of Nigerians’ have adopted the e-Naira digital currency.
When the Central Bank of Nigeria (CBN) released the eNaira in October 2021, Nigeria became one of the first nations around the world to use a central bank digital currency (CBDC). However, adoption of the CBDC by the general public has been extremely slow, with about 0.5% of Nigeria’s population utilizing digital currency in their daily life. To promote its “cash-less Nigeria” strategy and encourage greater usage of the eNaira, the Central Bank of Nigeria has been compelled to take the extreme step of limiting the cash amount that people can withdraw from their bank.
In accordance with the guideline made public by the CBN, people and organizations are now only permitted to withdraw N20,000 ($45) per day and 100,000 ($225) weekly from ATMs. Bank account restrictions are 100,00 ($225) per day and 500,000 ($1,125) each week. Individuals pay 5%, and corporations 10% if they exceed the limitations. With the highest adoption rate in Africa and the 11th highest rate worldwide, Nigeria is home to a populace often regarded as the most crypto-savvy on the continent. In 2022, 35% of Nigerians 18–60 owned or traded cryptos.
Regulation is the idea behind the banning of cryptocurrency use in Nigeria.
Reversing the ban was not the primary concern, but rather developing a regulatory framework for digital currency, according to Ibrahim. The Securities and Exchange Commission oversees the capital market, while the Central Bank of Nigeria oversees the financial markets. The legislator claimed that these and other concerns have to be taken into account throughout the regulatory process. It’s not that cryptocurrencies are against the law, but there are no regulations in place to govern them, he explained. The need to regulate derivatives, commodities exchanges, digital currencies, and other financial innovations is just one example of why the act needs to be updated.