Digital Currency: Nigeria Suspends Plans to Regulate Cryptocurrencies

Cryptocurrency

Nigeria’s Securities and Exchange Commission has said it has put on hold plans to regulate cryptocurrencies in the country.

“For the purpose of admittance into the SEC regulatory incubation framework, the assessment of all persons and products affected by the CBN circular of Feb. 5, 2021, is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system,” SEC said in a statement on Thursday.

The exchange commission’s statement came days after Nigeria’s apex bank ordered financial institutions in the country to close accounts dealing in cryptocurrencies, saying the transactions posed risks to the economy.

SEC said its statement was necessitated due to several comments and inquiries from the public that there is a conflict between the SEC Statement on Digital Assets and their Classification and Treatment of September 11, 2020, and the Central Bank of Nigeria (CBN) Circular of February 5, 2021.

“We see no such contradictions or inconsistencies,” SEC said.

In reaction to CBN’s circular, Luno, a cryptocurrency trading platform Luno paused naira deposits pending the time it gets “urther clarity from the authorities.”

In September, SEC said it viewed cryptocurrencies as exchangeable securities and it would regulate them to provide protection for investors and to ensure the transactions are transparent.

SEC said it made the statement at the time, to provide regulatory certainty within the digital asset space, due to the growing volume of reported flows while Central Bank has identified certain risks, which if allowed to persist, will threaten investor protection.

Following risks identified in the transactions by the central bank, the SEC “engaged with the CBN and agreed to work together to further analyze, and better understand the identified risks to ensure that appropriate and adequate mitigants are put in place, should such securities be allowed in the future,” it said in its latest statement.

Nigeria has proven to be a hotspot for cryptocurrency. And apart from available statistics, the validation that came in 2020 alone was enough proof. The reasons are apparent: tech adoption, predominant young population, high inflation rates, volatile fiat currency, and an underperforming banking sector.

During the #EndSARS movement, over $80,000 was contributed in Bitcoin after non-profit activist group, Feminist Coalition’s account for voluntary donations was blocked.

According to a Quartz report, Nigeria accounts for 25% of the customer base of Paxful—a global P2P crypto platform—and has traded over $566 million in 2020. Local crypto exchange platform numbers also tell the story of a huge adoption.

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