Nigerian SEC Scraps Plan for Crypto Regulation after Central Bank Ban

The market regulator was running a sandbox for crypto companies.

The Nigerian Securities and Exchange Commission, the country’s financial market regulator, has suspended its plans to regulate cryptocurrencies after the central bank’s latest circular in suspending bank accounts of crypto companies.

According to a report by the local news portal, Daily Post, the SEC clarified its stance after receiving queries related to policy conflicts between the two regulators.

“For the purpose of admittance into the SEC Regulatory Incubation Framework, the assessment of all persons (and products) affected by the CBN Circular of February 5, 2021, is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system,” the SEC said in a statement.

Nigeria is one of the top countries in Africa with crypto penetration. According to market data compiled by Coin Dance, 60,215 Bitcoins were traded in Nigeria in the last five years, which is behind the US.

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The Nigerian SEC recognized cryptocurrencies in September 2020 and planned to create a regulatory sandbox for digital currencies. Though the sandbox program for crypto companies has been suspended, it will continue for non-crypto fintech firms.

Background

The Central Bank of Nigeria (CBN) last week issued a circular banning all banks and financial institutions from offering services to cryptocurrency exchanges. Companies not following the order would face ‘severe regulatory sanctions.’

Additionally, the crypto community reacted strongly against the ban, running social media campaigns. Many are now moving to peer-to-peer exchanges for Bitcoin purchases.

The discussions on the central bank circular even reached the country’s senate on Thursday, and many senators were divided. While some progressive senators demanded a more nuanced approach towards crypto, many argued that that Bitcoin usage has devalued the local fiat.

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