Regulation has been the major problem affecting the use of bitcoin and other cryptocurrencies across Africa. At the moment, crypto isn’t regulated in any African country, but there have been proposals in a few countries. The first was South Africa, and now Nigeria.
Considering the high rate of bitcoin interest in Nigeria – incomparable to any country in the World, talk more of Africa -, the proposal is likely to be implemented sooner than later. Right now, it is assertive that Nigeria is on the verge.
Nigeria’s Crypto Regulation Proposal
The body in charge of financial regulation in the country, the Securities and Exchange Commission (SEC), revealed plans to regulate the buying and selling of cryptocurrencies. This was proposed as a form of guide for issuers and sponsors of cryptocurrencies.
The SEC decided on this regulation with a major focus on protecting the interest of crypto investors and making the market transparent. While most crypto bodies would argue that the government seeks to take total control of cryptocurrencies via regulation, such isn’t the case in Nigeria.
However, the SEC’s regulation proposal is aimed at encouraging healthy investment practices in the Nigerian crypto space and not plans for derailment. Besides, the decentralized nature of the blockchain would make it so difficult.
Somewhat ironically, decentralization is one of the major factors driving the regulation. Not to mention, the reason why many people refrain from investing in crypto is that they doubt the legitimacy of the technology. However, a situation where blockchain technology is backed by the official regulatory body, there’ll be fewer questions about legitimacy.
However, there’s still not much information rolled out on how the regulation would work; however, from the official statement, it all has to do with securities. The SEC will only regulate cryptocurrencies that can be classified as securities.
Cryptocurrencies As Securities
By definition, securities are tradable financial assets which can be equities, debts, or hybrids. More simply, securities are proof of debt or ownership. Securities are usually considered to be money as they hold value.
However, will cryptocurrencies be regarded as “money” if they are regulated as securities by the SEC? The answer can go both ways but for the most, it is No.
In 2018, the Central Bank of Nigeria in a press release decreed that virtual currencies are not legal tender in Nigeria i.e cryptocurrencies are not money. Bitcoin, Ripples, Monero, Litecoin, Dogecoin, and Onecoin, were cited in that press release.
The release further stated that crypto investors and dealers are not legally backed. However, that could change if the SEC regulation comes into a realization. Regulation implies that the government is now particularly interested in cryptocurrency dealing and legal backing would follow.
Crypto Interest In Nigeria
Nigerians are very familiar with cryptocurrencies. In terms of consumer adoption, Nigeria has the largest share in the Africa crypto market. It’s almost as if no one is apprehensive about the absence of crypto regulation and everyone is bearing the risks individually.
Likewise, Google Trends statistics showed that Nigeria is the number 1 country for “Bitcoin” and “Ethereum” search terms. Merchants in Nigeria are accepting bitcoin as payment and popular bitcoin exchange companies as well as brokers that trade cryptocurrency are operating in the country.
Take, for instance, Patricia, a Nigerian cryptocurrency company. The company has recorded over 300,000 users but most importantly, launched the first Bitcoin debit card in Africa. Such events wouldn’t be happening if lots of Nigerians weren’t engaged in cryptocurrencies.
What Regulation Will Mean For The Nigeria Crypto Industry?
If the SEC should implement crypto regulation, Nigeria will experience a spike in the number of crypto investors. Such has been the case in other countries where crypto regulation exists.
Right now, the crypto industry in Nigeria is filled with individual investors who buy and sell bitcoin and other cryptocurrencies. If there should be regulation, the industry would welcome more institutional investors including companies, firms, business organizations, and the lot.
While individual investors may look at crypto investment as a gamble, give low and take high, institutional investors are more concerned about the safety of funds and many consider such investment risky.
Some are even worried about the impression that cryptocurrency is present in their portfolio to their clients as it is yet to be legally acclaimed. The regulation will make the crypto industry in Nigeria more comprehensive, most especially, to prospective investors.
Consequently, with more individual and institutional investors flooding in, there’s no limit to how much the crypto industry in Nigeria can grow considering the high current interest even with the lack of regulation.
Bottom Line
The SEC is yet to put crypto regulation into motion but the proposal is a significant move that should be celebrated as a massive boost to crypto adoption, not just in Nigeria, but Africa at large. Hence, Nigeria could show other African countries that crypto regulation can be achieved against all odds.
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