Nigeria is set to officially recognize cryptocurrencies under the 2025 Investment and Securities Bill, replacing outdated regulations. This new law defines crypto assets, facilitates trading platforms, and enhances investor protection. Economic challenges prompted government intervention against cryptocurrencies, leading to clandestine trading. Regulatory frameworks are evolving to manage fintech innovations and combat fraud, while ongoing discussions address jurisdictional overlaps. The legislation aims to protect investors and strengthen the capital market.
Nigeria is poised to officially recognize cryptocurrencies following the recent passage of the 2025 Nigerian Investment and Securities Bill by lawmakers, pending President Bola Tinubu’s endorsement. This new legislation will replace the outdated 2007 law and establishes a crypto asset as a digital representation of value used for trading and investing, while explicitly excluding digital fiat currencies. Furthermore, it grants legal status to platforms facilitating cryptocurrency transactions and custodial services.
Historically, the Nigerian government displayed ambivalence towards cryptocurrencies, triggered by significant economic challenges around 2015, including a drop in oil prices and currency devaluation. As many Nigerians turned to cryptocurrencies for financial security amid economic turmoil, this increased demand strained foreign exchange resources. Thus, the Central Bank of Nigeria intervened by closing bank accounts linked to cryptocurrency trading, thereby stifling the market, which subsequently transitioned to clandestine, peer-to-peer trading methods.
With the election of President Tinubu in mid-2023 and the appointment of Olayemi Cardoso as the Central Bank Governor, initial cryptocurrency regulations eased. However, tensions arose with a crackdown on the prominent exchange Binance, resulting in the detention and charging of its executives due to alleged financial misconduct. These controversies eventually led to international diplomatic efforts for resolution.
Concurrently, the Nigerian Securities and Exchange Commission (SEC) endeavored to create a regulatory framework capable of managing the evolving landscape of digital finance. The resulting Investment and Securities Act aims to modernize market operations and foster a favorable investment environment. Osita Izunaso, Chairman of the Senate Committee on Capital Markets, emphasized that the new legislation would significantly bolster the growth and diversification of the capital markets.
The regulatory landscape has evolved in response to the rise of fintech companies providing innovative investment solutions, such as PiggyVest and Cowrywise, which appeal to retail investors seeking higher returns. The bill also promises a commodity trading market and introduces guidelines for international investments, while imposing financial restrictions on local authorities to ensure sustainable borrowing practices.
To combat investment fraud, the SEC has intensified its efforts by issuing alerts about dubious investment schemes and illegal operators. The new legislation enhances SEC’s authority to penalize fraudsters with prison sentences of up to ten years and expands the Investor Protection Fund’s coverage to include losses from the revocation of brokerage licenses.
The comprehensive aim of this new legislation is to safeguard investors and strengthen regulatory oversight of mergers and acquisitions in the marketplace. However, concerns persist regarding the jurisdictional overlap between SEC and Central Bank authorities, especially regarding regulatory powers over financial institutions. The final bill awaits a review from lawmakers and endorsement from President Tinubu.
Currently, Nigeria’s capital market comprises three trading exchanges, specifically the Nigerian Exchange, FMDQ Exchange, and NASD. The SEC envisions a robust capital market necessary for enhancing economic diversification, underscoring the importance of the passage of this new Investment and Securities Bill.
In conclusion, Nigeria’s impending acceptance of cryptocurrencies through the 2025 Investment and Securities Bill marks a significant shift in its regulatory stance. The legislation seeks to establish a secure framework for digital assets, enhance investor protection, and bolster capital market practices. As the landscape evolves, ongoing dialogues between regulatory agencies will be vital to address jurisdictional challenges and ensure the sustainable growth of Nigeria’s financial markets.
Original Source: african.business
