Nigeria has proposed an important legislative framework that will legalize Bitcoin and other cryptocurrencies in the nation of more than 200 million people. According to a Sunday report by the local news outlet Punch, a new measure that is being worked on in Nigeria would allow local officials to acknowledge cryptocurrency as ‘capital for investment’.
According to Babangida Ibrahim, chairman of the House of Representatives Committee on Capital Market and Institutions, the proposed Investments and Securities Act, 2007 (Amendment) Bill will, if passed, define the supervisory responsibilities of the Central Bank of Nigeria and the nation’s Securities and Exchange Commission (SEC) with regard to digital currencies. Ibrahim did not mention when the law will be passed.
Ibrahim stated that the bill is not a complete shift away from restrictive laws in place, only a review of what could be done within the current legal framework. However, he does believe that Nigeria must keep up with global economic innovations.
Nigeria’s SEC recently said that it would encourage the investment in “sensible digital assets,” ensuring investment protection, and also explore blockchain technology to enhance both virtual and conventional investment options.
Why does it matter?
If the Investments and Securities Act, 2007 (Amendment) Bill passes, the Nigerian SEC will recognize cryptocurrencies and other digital assets as capital for investment.
Notably, the Nigerian Export Processing Zones Authority (NEPZA) stated in a press release in September that it considered partnering with crypto exchange Binance to create a virtual free zone to promote economic growth.
Nigeria’s CBDC eNaira Fails to gain traction
The regulatory framework is released at a time when Nigeria has been subject to a restriction on cryptocurrency for financial institutions for almost two years and its CBDC, the eNaira, has not been adopted widely.
In 2017, Nigeria prohibited organizations from facilitating bitcoin transactions. In May, the SEC made it clear that it considered digital currencies to be securities since they reflect assets like debt or equity claims against the issuer.
“They are not illegal, but there are no regulations for them. These are a few of the reasons why the Act has to be reviewed and restrictions put in place for the majority of activities, including derivatives, commodity exchanges, virtual currencies, and many other things “Ibrahim spoke to Punch.
Since the launch of the CBDC in October 2021, it currently sits at an adoption rate of only 0.5% among the population. Further endorsement of the eNaira could be hampered by the legal blueprint.
“This bill is basically going to create more adoption of cryptocurrencies. Through regulation of this asset class, we might start to see taxing and legal registration if you want to build something in the blockchain space,” says Anointing Aha, Community Manager for Nigeria at global crypto exchange LBank.
For now, Nigeria seems to be moving towards further adoption, but nothing is set in stone. “Nigeria’s presidential election is coming up early next year, and a lot will depend on the new president,” Aha adds.
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