By Michael Scott
The Nigerian government proposed a bill to facilitate recognition of Bitcoin and cryptos usage aligned with global practices. The law is set for enactment when Nigeria’s CBDC – eNaira, has realized dismal adoption at 0.5% since its October 2021 introduction.
Objectives of Proposed Amendments
Capital Markets chair Babangida Ibrahim revealed the plans to amend the Investments and Securities Act of 2007. In his response before the House of Representatives Committee, Ibrahim indicated that the amendment bill would provide a regulatory framework to classify digital funds and cryptos within the capital investment category.
Ibrahim noted that the absence of a supportive regulatory framework made it challenging for the Securities and Exchange Commission to honor its mandate in developing Nigeria’s capital markets to match global trends. As such, Ibrahim portrayed the proposed amendment as a gateway to creating a vibrant capital market for Nigeria.
Overcoming the Inadequacy of CBN Crackdown
The Capital Markets chair clarified that the amendment does not seek to reverse the February 2021 prohibition of crypto activities issued by the Central Bank of Nigeria (CBN). Ibrahim echoed his response during the second reading of the amendment bill that CBN directed Nigerian firms engaging in crypto-related services to cease operations. He added that the CBN order instructed financial institutions to close accounts held by entities and individuals involved in crypto-related trading.
Ibrahim ruled out that the proposed amendment would reverse the ban. Instead, he noted that the bill offers a secondary perspective of the existing scope of CBN powers. He explained that CBN’s discovery guides the amendment that the initial ban was ineffective as most crypto investors held foreign accounts beyond its jurisdiction.
Ibrahim backed the report indicating that the amendment is poised to bring regulatory clarity on the CBN’s and SEC’s roles in digital currencies. The proposed bill is timely, considering that Nigerians have little interest in CBDC intake. In particular, Ibrahim lamented that the eNaira adoption rate had been stuck at 0.5% since its establishment in October 2021.
Increased Crypto-Curiosity in Nigeria
Nigeria has witnessed increased crypto activity with a higher affinity for Bitcoin. CoinGecko study in April 2022 ranked Nigeria as the leader in crypto curiosity. The study attributed the interest in crypto activity to devotion by Nigerians to overcome inflationary pressure and the prevailing economic slowdown.
Recently, the government appears to have reneged from its restrictive approach to cryptocurrencies since September, when it completed early-phase discussions with Binance. The government update revealed plans to engage Binance in developing a crypto-supportive economic zone. The government pledged to accelerate the establishment of a crypto-friendly zone to make Nigeria a regional hub for blockchain-related activities.