Nigeria Prepares New Digital Asset Regulations
Nigeria, known for its keen interest in cryptocurrencies, is gearing up to establish new industry regulations for digital asset platforms. The Nigerian Securities and Exchange Commission (SEC) is considering authorizing licensed digital exchanges to list tokens supported by certain assets, according to Bloomberg.
Tokens Backed by Assets Only
Abdulkadir Abbas, the Nigerian SEC’s head of securities and investment, revealed that the regulatory body plans to permit listings of tokens based on assets such as equity, debt, or property. Cryptocurrencies like Bitcoin and Ether will not be included in this list.
Registration of Fintech Firms
The SEC plans to register fintech firms as digital sub-brokers, crowdfunding intermediaries, fund managers, and tokenized coin issuers. However, the authority will not register crypto exchanges until the central bank establishes clear regulations for the crypto market.
Year-long “Regulatory Incubation”
License applicants will be subject to a year of “regulatory incubation,” during which the SEC will monitor their operations and services in Nigeria. Based on the findings, the SEC will determine whether to register the firm, extend the incubation period, or ask the firm to cease operation.
Nigeria’s Stance on Cryptocurrencies
Despite banning local banks from providing services to cryptocurrency-related platforms in early 2021, Nigeria has emerged as one of the most active countries in terms of cryptocurrency adoption and curiosity. Google Trends data reveals that Nigeria ranks second in search interest for the keyword “Bitcoin,” just behind El Salvador.
eNaira Gains Traction
While restricting cryptocurrencies, the Central Bank of Nigeria has been actively promoting its central bank digital currency, the eNaira. The eNaira reportedly experienced increased adoption as the nation’s fiat reserves faced severe shortages.
Embracing the Future of Digital Assets
In conclusion, Nigeria’s SEC is taking a cautious yet progressive approach to regulating digital assets. By focusing on tokens backed by tangible assets, the regulatory body aims to strike a balance between fostering innovation and minimizing potential risks. While cryptocurrencies like Bitcoin and Ether remain excluded, the new rules demonstrate Nigeria’s commitment to embracing the future of digital assets and fintech. As the eNaira gains traction, the country continues to be a key player in the evolving landscape of digital currencies and financial technology.