Nigeria’s Finance Ministry to Collaborate With SEC on Crypto Framework

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In Brief
  • Nigeria's Finance Ministry stated on Nov 24 that it will collaborate with the country's SEC to establish a comprehensive crypto asset regulation framework for the benefit of all stakeholders.

  • The news comes two months after Nigeria's SEC released a code recognizing crypto trading as a regulated activity and classifying crypto assets as securities.

  • Nigeria is currently witnessing broad-based crypto adoption as capital controls, forex scarcity and currency devaluation push businesses and individuals away from fiat.

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Nigeria’s Federal Ministry of Finance will collaborate with the country’s Securities and Exchange Commission (SEC) to develop a comprehensive regulatory document overseeing cryptocurrency trading and usage in Africa’s largest economy.

This was revealed in Lagos on Nov 24 at the ‘Fintech In Nigeria: State Of Play’ conference organized by The Economist Intelligence Unit and Mastercard.

Speaking at the event, Special Adviser on ICT to the Minister, Armstrong Takang stated that the Nigerian government “sees an opportunity” in crypto and blockchain adoption, and will thus create regulation that benefits all stakeholders.

Nigeria’s Crypto-Skeptic Government Finally Comes Along

On Sep 14, BeInCrypto reported that the Nigerian SEC officially classified crypto assets as securities, and listed crypto trading as a regulated activity under SEC rules.

While the announcement marked the first time a Nigerian financial regulator had adopted a definite position on cryptocurrency, it did not represent full regulation of the space in the absence of any word from the Central Bank of Nigeria (CBN).

The new announcement is the long-awaited official confirmation that the Nigerian government will at some point fully recognize and legalize the use of crypto assets.

Speaking about the planned collaboration between the Finance Ministry and the SEC, Takang also mentioned that due to the cross-border implications of crypto usage, the Finance Ministry is also working with the Ministry of Industry and Trade and Nigerian Customs.

Crypto Goes Mainstream In Distressed Economy

Driven by harsh economic realities in an economy beset by strict capital controls, forex shortages, and a black market exchange rate differential touching 33%, Nigerians are turning in record numbers to bitcoin as a solution.

Despite the CBN’s lack of regulatory clarity, exchanges like Binance and Buycoins Africa have been able to establish banking relationships with CBN-regulated financial institutions, which eliminate the need for Nigerian users to purchase crypto with scarce US dollars.

As seen below, this has helped turn bitcoin into the de-facto foreign exchange instrument for everyday Nigerians looking to carry out international trade or take their wealth out of the local naira (NGN).

Reacting to Takang’s revelation at the event, Stakeholders in Blockchain Association of Nigeria President, Paul Ezeafulukwe said:

“With CBN being one of the key stakeholders in the proposed blockchain adoption strategy, I do not think that CBN will eventually introduce a policy or regulation that is not aligned with the principles and strategies in the proposed document. Besides, CBN, through its representative at the stakeholder engagement, indicated its readiness in principle to provide regulatory support.”

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David is a journalist, writer and broadcaster whose work has appeared on CNN, The Africa Report, The New Yorker Magazine and The Washington Post. His work as a satirist on 'The Other News,' Nigeria's answer to The Daily Show has featured in the New Yorker Magazine and in the Netflix documentary 'Larry Charles' Dangerous World of Comedy.' In 2018, he was nominated by the US State Department for the 2019 Edward Murrow program for journalists under the International Visitors Leadership Program (IVLP). He tweets at @DavidHundeyin

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