Since inauguration, President Tinubu Bola Ahmed’s administration has demonstrated proactiveness by signing multiple bills into law and enacting policies. Among them is the recently announced Blockchain policy which stakeholders, economic and blockchain experts see as a greenlight that the federal government may soon lift its ban on cryptocurrency. As stated in the newly approved National Blockchain Policy, “The Nigerian Government recognises cryptocurrency as one of the components that will catalyse the adoption of blockchain technology”.
Therefore, the Nigerian government, through this policy, creates a framework for the use of crypto and other related innovations that can aid in the prevention of risk factors like money laundering and fraud. This has the potential to increase acceptance of cryptocurrency in Nigeria and broaden its use among businesses and consumers. All this is coming in the face of the Central Bank of Nigeria ban on crypto transactions in 2021. The central bank asserted that cryptocurrencies are used to launder money, fund terrorist organizations, buy weapons of mass destruction, and avoid paying taxes.
Ban on crypto is comprehensible given the risk attached.
As the new policy seeks to develop a regulatory framework for various use cases of the blockchain, such as the eNaira, the CBN’s blockchain-powered digital currency, governments may still be crypto-averse despite the hopes of stakeholders. Senator Ihenyen, the Lead Partner and Head of Blockchain and Virtual Asset Practice at Infusion Lawyers, weighed in on the controversy, saying that despite the CBN stance, cryptocurrencies were not illegal in Nigeria because the legislature had not passed a law for that. Stakeholders in the cryptocurrency industry, he said, are counting on the CBN and other relevant agencies to leverage the National Blockchain Policy to smooth over tensions with the industry.
Sen. Ihenyen who is also the former president of Stakeholders in Blockchain Technology Association of Nigeria , argued that the Central Bank of Nigeria (CBN) ban/restriction of cryptocurrency-related transactions in Nigeria’s banking and financial sector was comprehensible given the risk attached with it, but that it should be lifted nonetheless. He indicated that the Anti-Money-Laundering Act of 2022 would be used to combat the problem. According to the new legislation, VASP are subject to the same AML/CFT regulations as other financial institutions. The NFIU has the resources to provide oversight and vigilance. AML/CFT compliance is nothing new for banks and other financial institutions.
Underlying blockchain technology is beyond cryptocurrency.
The CBN stance on ensuring proper Know Your Customer (KYC) for crypto-related firms is unchanged from its earlier letter to regulated entities. This complies with international norms, such as those put forward by the Financial Action Task Force. Nigeria can succeed if all relevant parties work together effectively. According to Sen. Ihenyen, the policy would create precedent for greater collaboration between the public and private sectors, which in turn would pave the way for greater blockchain innovation, capacity building, and widespread adoption.
Given that blockchain is the foundational technology for cryptocurrencies and many other modern tech-levered activities, this regulation is very much welcomed, says Dr. Biodun Adedipe, CEO of BAA Consult. He argued that the underlying blockchain technology had many applications beyond cryptocurrency. Bitcoin is essential to financial technology and the digital economy because it reduces complexity, standardizes, and streamlines the process of transactions and economic activities. Its relevance extends far beyond the context of the payment system where it’s now trending.
Robust regulatory frameworks for crypto are more crucial.
He concluded that a robust regulatory framework and standards for trading, reporting, and regulating cryptocurrencies are more crucial to the choice than whether they are banned or not. Prof. Akpan Ekpo, an economist and chairman of the Foundation for Economic Research and Training, stated that the contradictions between the ban and the proposed regulation were evidence that the blockchain policy had not been thoroughly considered. He emphasized the importance of coordinating efforts among the various government agencies involved in blockchain and cryptocurrency regulation.