Menu Close

Why Nigeria suspends plans to regulate cryptocurrencies, dealers

 

Alexander Davis | ConsumerConnect

Having earlier pronounced cryptocurrencies as ‘exchangeable securities’, and assured investors that it would regulate crypto transactions and ensure transparency to provide protection for them, Nigeria’s Securities and Exchange Commission (SEC) has suspended plans to regulate cryptocurrencies until those dealing in them are able to open bank accounts in the country.

The Central Bank of Nigeria (CBN) recently directed banks and other financial institutions to close accounts dealing in cryptocurrencies.

The Bankers’ Bank had explained such transactions in cryptocurrencies posed risks to the country’s economy, though implementation of the express directive seems to be on hold as of now.

It was learnt SEC in an e-mailed statement Thursday, February 11 said: “For the purpose of admittance into the SEC regulatory incubation framework, the assessment of all persons and products affected by the CBN circular of Feb. 5, 2021, is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system.”

Recall the Nigerian capital market regulatory agency September 2020 said it viewed cryptocurrencies as exchangeable securities and would regulate them to provide protection for investors and to ensure the transactions are transparent.

After the CBN’s circular to banks and other financial institutions, Luno, a cryptocurrency trading platform, reportedly paused Naira deposits pending the time it gets “further clarity from the authorities”.

SEC in its statement, however, noted following the risks the CBN identified in such transactions, it “engaged with the CBN and agreed to work together to further analyse, and better understand the identified risks to ensure that appropriate and adequate mitigants are put in place, should such securities be allowed in the future.”

It noted that the decision for the suspension was informed by numerous comments and inquiries from the public that there is a conflict between the SEC Statement on Digital Assets and their Classification and Treatment of September 11, 2020, and the Central Bank of Nigeria (CBN) Circular of February 5, 2021.

However, the agency stated: “We see no such contradictions or inconsistencies.”

Nigeria has proved to be a hotspot for cryptocurrencies. And apart from available statistics, the validation that came in 2020 alone was enough proof, reports The Guardian.

Report says the reasons are apparent in connection with tech adoption, predominant young population, high inflation rates, volatile fiat currency, and an underperforming banking sector.

During the #EndSARS protests across the country October 2020, more than $80,000 was said to have been contributed in Bitcoin after non-profit activist group, Feminist Coalition’s account for voluntary donations was blocked in the process.

A Quartz report also disclosed that Nigeria accounts for 25 percent of the customer base of Paxful—a global P2P crypto platform—and had traded over $566 million in 2020.

Local crypto exchange platform numbers also tell the story of a huge adoption, according to report.

Kindly Share This Story

Kindly share this story