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Crypto regulatory crackdowns have been common in many parts of the world, including Nigeria. However, the country that is home to one of the world’s largest groups of crypto-traders is now attempting to implement legislation that would increase investor protection.
The country’s Securities and Exchange Commission (SEC) is making headlines today after establishing a special fintech branch to research crypto and blockchain investment products. According to local media, this might eventually be fashioned into a crypto-regulatory framework.
According to Lamido Yuguda, Director-General of the Securities and Exchange Commission,
“We are looking at this market closely to see how we can bring out regulations that will help investors protect their investment in blockchain.”
Although officials have not yet specified a date for adopting these restrictions, Yuguda stated that the SEC will step in with regulations once crypto is permitted within the Nigerian banking sector. The country’s Securities and Exchange Commission has attempted to regulate cryptocurrency as securities, while other countries are still waiting for clarity on the issue.
No surprise there, given that Nigeria is one of the largest marketplaces for crypto-trading, particularly when peer-to-peer transactions are considered. However, the central bank prohibited lenders from transacting or enabling transactions in cryptocurrency in February.
As per reports, the rise in the use of Bitcoin was driven by payments from small businesses and a weakening naira currency. This made it difficult to get USD require to import goods and services.
However, the commission has been in talks with the central bank. According to Yuguda, this will fuel the launch of the digital currency, e-naira. The report added,
“The commission is seeking to work with fintech firms to boost the marketing of domestic securities to prevent capital flight. The central bank this month blocked the accounts of six firms for allegedly sourcing funds from illegal foreign exchange operators to buy foreign securities and cryptocurrencies.”
The SEC also seeks to increase savings through investment plans. Over 4 trillion naira [$9.7 billion] is now being managed by public and commercial investment managers. As a result, private managers have been urged to implement custody measures for investor protection.
With the SEC attempting to stay up with the burgeoning crypto-space while also attempting to limit risk to its economy, crypto-traders currently enjoy more regulatory certainty than in most other countries.