Nigerian Government seeks to regulate Blockchain technology, as Cryptocurrency holdings rises

By: Dickson Arinze

December 14, 2020 6:44 PM

Blockchain could boost global GDP by $1.76 trillion over the next ten years according to a recent study. To have that level of economic impact, the industry needs a clear regulatory framework in place to guide the sector.

Using Nigeria, as case study. The country is way ahead when it comes to cryptocurrency adoption in Africa region. High bitcoin and crypto ownership rates, rising demand for private wallets, rapidly growing peer-to-peer volumes. This rise has been driven by economic and political instability in the country with Nigerians increasingly lack of trust in Naira (Fiat) due to the history of rapid inflation, many Nigerians have started searching for better alternative to preserve value by moving their money into Bitcoin over recent years which have proven to be safe heaven to many. Cross-border payments are another area which cryptocurrencies are addressing longstanding difficulties in Africa.

While Nigerians turn to cryptocurrency out of necessity, the government is beginning to recognize the economic and societal potential of this technology. Nigeria is Africa’s largest economy and its population, with an average age of 18.1 years, is already digitally-native. The director-general for Nigeria’s agency for information technology development, or NITDA, has recently estimated that over the next decade, its blockchain industry could generate between $6 billion to 10 billion in revenues for the state. NITDA released its National Blockchain Adoption Strategy Framework in November but indicated that for any blockchain strategy to work, a clear and comprehensive regulatory framework is needed.

It’s no surprise that Nigeria is getting serious about the blockchain industry, given its potential to increase global GDP by $1.76 trillion over the next decade. A recent study shows the main economic impact to be in the fields of payments and financial instruments, supply chain, and identity verification. However, for the blockchain industry to succeed, it needs “a friendly policy environment, a business ecosystem that is ready to exploit the new opportunities that technology opens, and a suitable industry mix.” While Nigeria has had major progress in blockchain regulation so far, it's welcome progress to see the Nigerian government doing its bits to support blockchain adoption.

The role of regulation should be to create ethical and fair standards while encouraging innovation, harness blockchain technology for economic and social interest.