Nigeria to legalize digital assets with new bill

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Nigeria will soon legalize Bitcoin once the country’s parliament passes a draft bill that seeks to formally recognize digital assets.

Dubbed the Investments and Securities Act 2007 (Amendment) Bill, the draft legislation will give the Securities and Exchange Commission jurisdiction over the industry. It officially describes digital assets as “capital for investment,” local outlet Punch reports.

The bill is at an advanced stage in parliament, Babangida Ibrahim, who chairs the House of Representatives Committee on Capital Market and Institutions, told the outlet in an interview this week.

Ibrahim believes the bill is timely and will allow Nigeria to keep pace with global financial and securities developments.

“In recent times, there are a lot of changes within the capital market, especially with the introduction of digital currencies, commodity exchanges, and so many other things that are essential, that need to be captured in the new Act,” he told the outlet.

The new bill also gives the Central Bank of Nigeria (CBN) jurisdiction over the industry. CBN has been hostile towards Bitcoin for years now. While Nigeria hasn’t declared digital assets illegal, the central bank has prohibited banks from offering any service to VASPs. It also ordered them to comb through the books, identify any accounts conducting digital asset transactions, and shut them down.

However, despite the banking ban, Nigerians continue to be highly active in the market, with some studies ranking them as the second biggest peer-to-peer after the United States.

“They are digital. That is why – if you remember – when cryptocurrency was initially banned in Nigeria, the CBN discovered that most of these investors don’t even use local accounts. So, they are not within the jurisdiction of the CBN. Because they are not using local accounts, there is no way the CBN can check them,” the lawmaker observed.

Despite the CBN ban, Ibrahim noted that digital assets aren’t illegal in Nigeria. However, the country lacks formal regulations to guide stakeholders and protect investors.

“It is not that they are illegal, but we don’t have regulations for them. So, these are some of the reasons why we need to review the Act and put some regulations for most of the activities – derivatives, commodity exchanges, digital currencies, and so many other things,” he concluded.

While Nigeria strives to regulate the digital asset industry, its central bank digital currency, the eNaira, has seen little adoption. The eNaira has been around since October 2021, but to date, it has only managed to capture a very small percentage of the digital payments market.

Watch: The BSV Global Blockchain Convention panel, Blockchain in Africa