Nigeria Begins Process To Legalize Cryptocurrency Use

Updated: 19 December 2022

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Nigeria is looking to change its stance around private cryptocurrencies. According to a local publication, the chairman of the House of Representatives Committee on Capital Markets and Institutions of Nigeria, Babangida Ibrahim, is planning to pass a law that will legalize the use of Bitcoin and other cryptocurrencies.

Nigeria to legalize cryptocurrency use

The bill brought before legislatures will be an amendment to the Investment Securities Act 2007. Once this bill is passed, Nigeria’s Securities and Exchange Commission (SEC) will recognize cryptocurrencies as legal capital for investment.

The bill will also define how the Central Bank of Nigeria can regulate digital currencies. While speaking with the local news publication, Ibrahim said that Nigeria needed an efficient and vibrant capital market, and one of the ways to do this was to keep up with global practices.

“In recent time, 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. Like I said, it is better to talk about this after consideration of the reports,” Ibrahim added.

He further added that despite the ban imposed against cryptocurrency investments in Nigeria, there was a loophole as most investors in the country never used local accounts to trade these digital assets. Such trades were not within the regulatory landscape of the Central Bank of Nigeria.

The lawmaker noted that these issues were why the country was planning to regulate these digital assets, adding that they were not illegal. Therefore, the act in question needed to be amended to include regulatory guidelines for more financial products, including cryptocurrencies, commodity exchanges, and derivatives.

Crypto regulations in Nigeria

The recent move to amend the 2007 Investment Securities Act is a turnaround for the Nigerian government that had earlier imposed a ban on cryptocurrency investments. In February 2021, Nigeria banned Bitcoin by prohibiting all regulated financial companies from offering cryptocurrency services.

Despite this ban, Nigeria has remained one of the largest crypto hubs in the African continent. The country has the largest volume of Bitcoin peer-to-peer trades globally. A report by Chainalysis also notes that Nigeria has played a significant role in promoting the adoption of Bitcoin.

Bitcoin activities also have a significant presence in the country despite regulators cracking down on usage. The crypto community in Nigeria has constructed a Bitcoin village, where Bitcoiners have been involved in multiple development and philanthropic works.

After Nigeria banned cryptocurrencies last year, the country launched a central bank digital currency (CBDC) known as the eNaira, becoming the first African country to have a CBDC. However, the CBDC has not gained a high adoption level as expected. The Nigerian government has attempted to provide incentives to promote usage, but adoption remains notably low.

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