Nigerian authorities are cautiously regulating Africa’s largest cryptocurrency market to establish legal certainty amidst fraud and volatility. The SEC has approved two exchanges and is pushing for regulatory clarity, although challenges remain, including rampant fraud and restrictive measures. Industry leaders emphasize the need for a coherent regulatory environment to bolster investor confidence.
Nigerian authorities are cautiously moving towards regulating Africa’s largest cryptocurrency market, aiming to create legal certainty amid widespread fraud and volatility. For years, government officials remained suspicious of digital assets, despite Nigeria’s positioning as the second largest country for crypto adoption globally, as noted by Chainalysis.
In recent developments, the Securities and Exchange Commission (SEC) has initiated steps to clarify the use of digital assets. In August, the SEC announced it had granted “Approval-in-Principle” to exchanges Busha Digital Limited and Quidax Technologies Limited, allowing them to commence operations. Buchi Okoro, the CEO of Quidax, expressed optimism, stating, “We believe this regulatory move is a positive start that will benefit the market in the long run by building trust and stability.”
Despite these promising strides, the regulatory efforts are encumbered by skepticism and rampant fraud, prompting interventions by law enforcement. In December, Nigeria’s Economic and Financial Crimes Commission arrested 792 individuals in connection with cryptocurrency investment fraud and romance scams, conspicuously highlighting the risks associated with cryptocurrency investments.
Furthermore, Nigeria’s parliament is deliberating an investment and securities bill aimed at establishing a structured regulatory framework for digital currencies. Following a shift in political leadership, President Bola Tinubu signaled a more favorable regulatory approach to cryptocurrencies, which many viewed as a positive transition from previous administrations.
However, recent restrictions imposed on crypto exchanges due to the depreciating naira have drawn criticism. In February 2024, Binance was notably coerced to cease operations involving the naira, leading to widespread withdrawal fears among users. Presently, Nigeria’s Inland Revenue Service is pursuing an $81.5 billion lawsuit against Binance for unauthorized operations.
Amidst these challenges, Laolu Biyi Samuel of Busha Digital Limited noted an overall positive shift in the regulatory landscape. Experts speculate that Nigeria’s growing interest in digital assets could align with emerging global trends like the U.S. strategic bitcoin reserve initiative. Yet, concerns remain regarding the potential for cryptocurrencies to facilitate money laundering and terrorism financing, particularly in a nation with a fragile social safety net. Obinna Iwuno of Stakeholders in Blockchain Association of Nigeria underscored the urgency for regulatory clarity, advocating for the discussion of a national Bitcoin strategy.
In conclusion, Nigeria’s tentative approach towards cryptocurrency regulation represents significant progress in addressing the challenges of fraud and market volatility. With the establishment of licensed exchanges and potential legislative frameworks, the country is working to foster a more stable and trusted digital asset environment. Nonetheless, continuing concerns surrounding fraud, money laundering, and an unstable regulatory atmosphere suggest that ongoing efforts are crucial for safeguarding investors and ensuring sustainable growth in the sector.
Original Source: www.voiceofalexandria.com
