In February 2021, the Security and Exchange Commission (SEC) of Nigeria has announced the suspension of any type of cryptocurrency in Nigeria. Additionally, the commission warned the public about any crypto-related activity and funding platforms. However, seeing the vast majority of people heading into crypto, the commission needs to back up its plan.
In May 2022, the commission shared guidelines on custody and trading of digital assets in Nigeria. Most investors and crypto experts thought this could be a step towards regulating cryptocurrencies and commerce in the country. However, on Sunday, the commission made headlines again with something else on its shoulders.
Is crypto a part of digital assets in Nigeria?
According to the Security and Exchange Commission, cryptocurrencies are not part of the country’s digital assets, which is why the May guidelines still apply in the country. Will this ban stay forever? Commission Director General Lamido Yuguda said no. “At least not until regulators agree on standards that keep investors safe,” he said.
On Friday, the managing director said that all crypto holders should avoid trading crypto because “crypto exchanges still lack access to the banking platform needed to conduct their transactions in Nigeria.”
What about other digital assets?
The commission is aware that the world is rapidly moving towards digital assets and you cannot hold them for too long, which is why they encourage investment in “sensitive digital assets”. The commission reported that “the commission’s job is to protect investors, not speculation.”
According to the commission, the volatility and security of crypto are real concerns for them. This is why the report states that “the commission may reject any application for registration of digital assets if, in its opinion, the proposed activity violates public order, is harmful to investors or violates any of the laws, rules and regulations implemented by the commission,”
Keeping volatility and safety in mind, all assets that are traded in Nigeria will have to have “the joint approach of different regulators”.
End of crypto in Nigeria?
It is almost impossible to ban the whole crypto transactions in nigeria this is because the country ranks 11th in the top 30 countries of the Chainalysis Global Crypto Adoption Index. There are several reasons why Nigerians and investors see crypto as the ultimate solution for them.
- It’s a speculative investment that can make them rich soon.
- Using Crypto as Inflation Protection
- It is a way to make an international payment to those who do not accept the Nigerian currency, the Naira.
- Moreover, people make payments to avoid multiple intermediaries along the way and make faster payments.
Given the above, it will be very difficult for the Nigerian government or the Nigerian Security and Trading Commission to ban crypto forever. This does not only apply to Nigeria, but to any other third world country in the world. They see crypto trading as the ultimate solution to their problems paying international investors and the complication of the process.
Many may consider this the final verdict of the Security and Exchange Commission. Yet, sooner and later, the commission will rethink and accept the fact that no matter what, crypto trading is the future of the country. However, the commission is concerned about the protection and security of payment for investors, banning crypto trading is not a solution. There may be regulations to protect investors from fraud.