Nigeria is poised to enact legislation recognizing Bitcoin and cryptocurrencies

By: Michael Wilson

December 20, 2022 7:22 AM

With little more than a year having passed since its inception in October 2021, the eNaira in Nigeria has only managed to attain a 0.5% adoption rate.

According to reports, the Nigerian government is planning to introduce a law that will officially legalize Bitcoin (BTC) and other cryptocurrencies as a method of keeping up with "global trends."

Nigerian newspaper Punch Newspapers broke the story on the 18th of December after interviewing House of Representatives Committee on Capital Markets Chairman Babangida Ibrahim.

The local Securities and Exchange Commission will be able to "recognize cryptocurrency and other digital monies as capital for investment" if the Investments and Securities Act 2007 (Amendment) Bill is passed and signed into law, as stated in the report.

Ibrahim emphasized the need of Nigeria becoming abreast of the latest happenings in the financial markets:

"Like I indicated in the second reading, we need a strong and dynamic capital market in Nigeria. In order to achieve this goal, we must be conversant with current worldwide standards."

The Central Bank of Nigeria (CBN) ordered Nigerian crypto exchanges and service providers to cease activity in February 2021, and mandated banks terminate the accounts of any persons or companies discovered to be involved in trading activities. This report comes about 24 months after the ban.

But Ibrahim, Nigeria's president from 1985 to 1993, says the law's passage isn't a complete reversal on the ban but rather a secondary assessment of the CBN's authority.

"We are looking at the legality: what is lawful and within the context of our business in Nigeria, the official said, indicating that the company was not concerned with whether or not the ban will be lifted."

The Central Bank of Nigeria (CBN) learned a hard lesson when it outlawed cryptocurrencies: most of these investors don't even utilize local accounts. Accordingly, the CBN does not have jurisdiction over them. He explained that the CBN cannot monitor their activities because they are not using local accounts.

The Investments and Securities Act of 2007 in Nigeria would be revised if this bill were to become law.

Bitcoin and other cryptocurrencies would be given official status under the law, and the regulatory functions of the Central Bank of Nigeria and the Securities Exchange Commission (SEC) of Nigeria will be laid down, according to the article.

The regulation appears at a time when Nigerians have demonstrated little enthusiasm for the eNaira, the digital money issued by the central bank of Nigeria. As of October, 2018 (twelve months after its inception), only 0.5% of the population had adopted the currency.

Adoption in Nigeria continued to rise even after the government banned cryptocurrencies in February 2021, suggesting that earlier efforts to crack down on crypto activity were futile.

From January to August of last year, Nigerians were second only to the United States in Bitcoin trade volume, and they were also more likely than inhabitants of any other country to google "Bitcoin" during that time period.

According to a report by CoinGecko in April, Nigerians also have the highest levels of crypto-curiousity of any country in the world. It's hardly surprising that people in Nigeria are curious, given that so many are concerned about the country's economy and its history of hyperinflation.

In addition, in September, Nigeria started preliminary talks with cryptocurrency exchange Binance to create a crypto-friendly economic zone that will try to assist crypto and blockchain-related firms in the region.