The Nigerian Securities and Exchange Commission, the country’s financial market regulator, has set up a fintech division to study all crypto-related investments and products to assess the feasibility of establishing a regulatory framework. According to Lamido Yuguda, the Director of the SEC, his bureau wants to come up with proper rulings to ‘protect’ consumers in the best way possible.
“We are looking at this market closely to see how we can bring out regulations that will help investors protect their investment in blockchain,” Yuguda told Reuters, although he did not provide a deadline for deploying regulations in the domestic crypto markets. However, the Head of the SEC clarified that the watchdog would proceed with regulatory frameworks once the Nigerian banking system allows cryptocurrencies.
In the same interview, Yuguda stated that the SEC had been in talks with the Central Bank of Nigeria (CBN) as they are preparing the launch of the forthcoming CBDC, e-Naira. Last month, the CBN drafted a series of guidelines addressing domestic banks about the Nigerian central bank digital currency project. The document is aimed to detail the design and the operational structure of the coin, which is reportedly intended to be legal tender in Nigeria.
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Reuters noted that the Nigerian financial watchdog looks forward to working with domestic fintech firms to prevent capital flight.
Nigeria and Cryptos
Early this year, the Nigerian SEC had a tough stance against cryptocurrencies after suspending its plans to regulate the digital assets following the central bank’s circular in suspending bank accounts for crypto companies.
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. In addition, the Nigerian SEC recognized cryptocurrencies in September 2020 and planned to create a regulatory sandbox for digital currencies.