Nigeria SEC Freezes Crypto Proposals After CB Ruling

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In Brief
  • Nigeria's SEC ceased crypto-related activity until cooperation with the Central Bank of Nigeria is ironed out.

  • The SEC maintains that all crypto is a security, but the CNB has a tight grip on the banking issues connected to crypto.

  • SEC cooperation with other types of fintech activities continues.

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The Securities and Exchange Commission of Nigeria (SEC) announced on Feb. 11 that it put on hold certain procedures until it coordinated with the Central Bank of Nigeria (CBN).

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The move comes after the CBN issued a Feb. 5 circular regarding the legality of cryptocurrency in Nigeria. As a result, the SEC is halting processes connected to bringing people and products under the SEC Regulatory Incubation Framework.

In its Feb. 11 press release, the SEC insisted that its 2020 ruling regarding cryptocurrencies and their relation to securities remained sound. Furthermore, the SEC recognized the CBN’s concerns over the banking system.  The two bodies will work together in order to ensure order in both the securities and banking realms. As such, the SEC will reopen its sandbox when participants are able to work within the Nigerian banking system.

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However, the SEC intends to continue working with fintech companies bringing new technologies to the capital markets.

The SEC declared on Sep. 14 that it recognized all cryptocurrencies as securities. At the time, the CBN did not explain how to regulate the banking side of the issue. Though analysts saw the SEC statement as positive for Nigeria, the effect on banking was largely overlooked by observers.

Nigerian Market Reaction

Nigerians reacted negatively to the news. Members of the crypto community in Nigeria stated that the move would just drive them to the P2P market and avoid banking altogether.

South Africa

Nigeria is not the only country in Africa tightening crypto regulation. In November, the South Africa Financial Sector Conduct Authority (FSCA) announced new regulations. Crypto holdings themselves were not touched. The FSCA required exchanges, brokers and advisors to register with them. 

However, the possibility of further regulation regarding tokens may be in the future for South Africa as well. After the Mirror Trading bitcoin ponzi scheme blew up in January, the FSCA has been calling for tighter regulation of cryptocurrency.

Will Kenya Adopt Bitcoin?

The possibility that Kenya will adopt bitcoin as a currency is a rumor that surfaced last week, though supposed quotes from Central Bank Governor Patrick Njoroge come from broken links. As in Nigeria, digital currencies are popular in part because of constantly depreciating currency. One thing that is sure, though, is that Kenya is among the top bitcoin maximalist countries on the planet. Kenya, along with Nigeria and South Africa, ranks high among bitcoin using nations, both in terms of Google searches and a Chainalysis report.

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James Hydzik is a finance and technology writer and editor based in Kyiv, Ukraine. He is especially interested in the development of regulation in the face of increasingly rapid technological change. He previously covered the CEE region for Financial Times banking and FDI magazines. An ardent believer in gut renovating eastern Europe one flat at a time, he currently holds more home renovation gear than crypto.

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