Nigeria is likely to soon pass a law amendment that will make digital currencies like bitcoin legal, a Nigerian newspaper reports. A remarkable twist because the Nigerian government has not been very receptive to Bitcoin until now.
It is an amendment to the Nigerian Securities Act of 2007. If passed and implemented, the amendment will see Bitcoin and other digital currencies legally recognized as investment capital by the Nigerian Securities & Exchange Commission (SEC). There would also be clarification on how supervision is divided between the central bank and the Nigerian SEC.
According to Babangida Ibrahim, the chairman of the House of Representatives Committee on Capital Markets and Institutions, the changes are necessary to keep pace with global economic innovations.
“We need an efficient and vibrant capital market in Nigeria”Abraham said, “To do that, we need to be up-to-date with global practices.”
“Recently, there have been many changes in the capital market, especially due to the introduction of digital currencies, commodity exchanges and many other things that are significant, which should be reflected in the new law.”Abraham said.
Nigeria is one of the Bitcoin adoption hotspots in Africa. According to Google Trends, nowhere in Africa is there as much search for ‘bitcoin’ and according to various surveys, more than a quarter of the population owns a cryptocurrency.
The Nigerian government initially appeared to focus on regulation. Until the #EndSARS protests, protesters used bitcoin for fundraising when their bank accounts were frozen by the authorities. The central bank then stated that banks are prohibited from providing services to companies or individuals involved in transactions involving Bitcoin or other cryptocurrencies.
The government later launched its own digital currency, a so-called
, but it is still hardly used by anyone. Recently, the Nigerian central bank introduced restrictions to limit the amount of US dollars that can be withdrawn in an attempt to encourage the use of CBDC as an alternative.
Bitcoin trading did not disappear due to the ban, but moved to other channels. onFor example, trading platform Paxful, the Nigerian market has grown by 27% since the ban, making Nigeria the largest today peer to peermarket in the world.
No cancellation ban
In addition, it was found that many Nigerian bitcoin owners did not use local service providers to buy or trade. “These currencies know no borders. You can stay here in Nigeria and invest in the US, Canada or elsewhere.”Abraham said.
“They are digital”he explained, That is why when cryptocurrencies were initially banned in Nigeria, the central bank found that most of these investors do not even use local accounts. So they are not under the jurisdiction of the central bank. Since they do not use local accounts, the central bank does not control them in any way.”
According to him, regulation is necessary to steer the market in the right direction. “It’s not because they’re illegal, but we have no rules for them”Abraham said.
He emphasizes, however, that it is not intended to lift the central bank’s ban. “It is not about lifting the ban. We are looking at legality: what is legal and what is within the scope of our operations in Nigeria. The central bank regulates the financial markets and the Securities & Exchange Commission regulates the capital market.”
It seems to insinuate that bitcoin may be allowed in Nigeria as a means of investment but not yet as a means of payment.
Other countries are also struggling with the trade-off between a ban and regulation, such as India and Russia.