- May 5, 2023
- Posted by: [email protected]
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Nigeria, a country with a high level of interest in cryptocurrencies, is developing new regulations for digital asset platforms. According to recent news, the Nigerian Securities and Exchange Commission (SEC) is reportedly considering allowing licensed digital exchanges to list tokens backed by assets such as equity, debt, or property. Cryptocurrencies such as Bitcoin and Ether will not be among the listed assets, according to the head of securities and investment at the Nigerian SEC, Abdulkadir Abbas. The SEC intends to register fintech firms as digital sub-brokers, crowdfunding intermediaries, fund managers, and tokenized coin issuers, with a year of “regulatory incubation” for license applicants to allow the authority to study their operations before rendering their services in the country.
However, the Nigerian central bank banned local banks from providing services to cryptocurrency-related platforms at the beginning of 2021, citing the high risks associated with trading cryptocurrencies. The bank also pledged to impose strict penalties on any lender or financial institution failing to comply with the directive. Nevertheless, Nigerian has become one of the most active countries in terms of adoption and interest in cryptocurrencies. According to Google Trends data, Nigeria ranks second in terms of search interest for the keyword “Bitcoin,” behind El Salvador, which adopted Bitcoin as legal tender in 2021. Other jurisdictions on the top-five list of crypto-curious countries include Slovenia, the Netherlands, and Switzerland.
Chainalysis’ crypto adoption index also identified Nigeria as one of the top 20 countries in terms of crypto adoption in 2022. While the Central Bank of Nigeria has prohibited cryptocurrencies, it has actively promoted its own digital currency, known as the eNaira. Despite a slow start, the eNaira reportedly saw increased adoption due to severe shortages of national fiat reserves. The SEC’s plans for regulation could create a more supportive environment for fintech firms and digital exchanges in Nigeria, although the central bank’s ban on crypto-related services will remain a barrier to broader adoption of cryptocurrencies in the country.
