The Central Bank of Nigeria (CBN) and Nigeria’s Securities and Exchange Commission (SEC) have agreed to come to terms and collaborate in matters and decisions to deal with the country’s crypto regulations. Finally, they are planning to find ways on how to regulate the cryptocurrency market. This was at a virtual lecture organized by the Association of Capital Market Academics of Nigeria (ACMAN) in Abuja on Sunday.
The Head of Department, Registration, Exchanges, Market Infrastructure and Innovation Department of SEC, Timi Agama, described the cryptocurrency market as an air that should not be “caged or regulated.” He also mentioned that the cryptocurrency market is about two trillion dollars which could not be ignored. He said:
“Part of the desire of the SEC even in the future is to provide a regulatory framework that will take care of all these challenges that we have seen internationally and the entire world is grappling with in terms of cryptocurrency and digital assets. For us at the SEC and capital market, it is something to look at, the world cannot be moving forward, and we will be static, no.”
Nigeria: The Second-Largest Bitcoin Market in the World
This decision comes after CBN banned cryptocurrency transactions in the country on the 5th of February 2021. The central bank released a letter addressed to banks and other financial institutions stating prohibition of deals in cryptocurrencies and payment for cryptocurrency exchanges. Moreover, it ordered all cryptocurrency accounts to be closed.
Presently, Nigeria has the second-largest Bitcoin market in the world. So to no surprise, the ban triggered the citizens of the country and welcomed a lot of social and political unrest. The ban came as a major setback for Nigeria’s growing cryptocurrency market and innovation in the fintech industry.
The Ban Fueled Mistrust in the Government
Given that Nigeria is a country committed to building its digital economy, the ban on cryptocurrency transactions hit like a rock to common men and the government. The new directive does not completely throw out the 2017 regulations but in fact, it goes a step further than the guidance by making crypto trading nearly impossible in Nigeria. The earlier guidance did not allow banks to manage crypto transactions, however, it did allow them to have exchanges as customers, provided they met certain regulations.
With this, everything regarding cryptocurrency came to standstill. Therefore, it bought in a lot of hate from citizens as well as from the government. Ever since the letter started to go viral on the internet, Nigerian crypto users tweeted the hashtag #WeWantOurCryptoBack over 26,000 times, according to data collected from SproutSocial. Apart from protests, the crypto community in the country started to turn towards P2P exchanges to continue transactions in Bitcoin. Interestingly, the ban was not directly affecting the P2P exchanges. Therefore, the crypto traders in the country will continue to use crypto in non-traceable ways. CBN also clashed with the SEC regarding the decision. Which made the CBN rethink their decision. After this, the (SEC) paused its regulatory review of crypto, pending CBN clarification.
Timi Agama, witnessing the opportunity in the crypto market, said:
“A market that has an opportunity for ICOs, derivatives, is not a market we can ignore.”
Will India Follow?
Everything that has happened in Nigeria so far related to the crypto space has made Indian traders wonder whether India is next in line to uphold crypto regulations. Over the past few months, we are actually seeing a lot of headlines regarding India’s decision on cryptocurrency transactions and digital assets. In March 2020, the Supreme Court of India lifted a ban on cryptocurrency transactions placed by the Reserve Bank of India.
However, the country is yet to decide its fate with digital currencies and the blockchain market. Meanwhile, crypto investors in India think it is time for the Indian government to accept the crypto industry, considering the investments pouring into crypto assets, to uplift the recent downfall of the Indian economy.