Nigeria’s Securities and Exchange Commission (SEC) plans to onboard crypto firms through a new exchange registration process.
Licensed exchanges could soon offer asset-backed tokens in coin offerings to help lure Nigeria’s young population.
Nigeria’s SEC Set to be Crypto Regulator Under New Plan
The SEC must agree with the central bank on standards before the securities regulator can complete registration of the exchanges. After the government bodies agree, exchanges can offer basic services in a regulatory sandbox for up to 10 months.
This restricted environment will enable the SEC to observe the exchange’s operations and their suitability for Nigerians.
While the Central Bank of Nigeria has banned commercial banks from offering crypto services, cryptocurrencies are not illegal.
The SEC issued preliminary rules on issuing, offering, and holding digital assets last May. These rules laid the groundwork for new crypto legislation in an upcoming Finance Bill, which also includes crypto asset tax guidelines.
Nigerian investors currently pay capital gains tax on crypto holdings.
Zambia’s science and technology minister Felix Mutati announced in April that the country would conclude crypto simulations by the end of June. The simulations mimic real-world crypto usage to help the government develop regulations balancing innovation with customer protection.
Crypto Regulator Slow to Respond Amid P2P Explosion
Nigerians have grown desperate for economic safe havens following the recent cash shortage in the nation. The country redesigned its physical naira to combat counterfeiting, but the move ended up hurting the most vulnerable, increasing Bitcoin’s appeal.
Nigeria ranked eleventh on Chainalysis 2022 Global Crypto Adoption Index and seventeenth in trading volume on peer-to-peer (P2P) exchanges.
Nigerians account for the highest non-U.S. trading volumes on peer-to-peer (P2P) exchanges. Unlike centralized exchanges, P2P companies don’t offer order book matching.
Instead, they directly connect crypto buyers and sellers. Before its recent shutdown, the P2P exchange Paxful proved popular with Nigerians.
Increasing African stablecoin usage and U.S. dollar virtual cards have also helped Nigerians escape inflation.
Payments company Strike sends U.S. dollars to Nigerian, Ghanaian, and Kenyan partners through Bitcoin’s Lightning Network. The partners convert the dollars into local currency.
For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.
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