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Blockchain technology is gaining strong use cases in the traditional financial sector. Nigeria Exchange Ltd, the largest stock exchange in Nigeria, has launched a trading platform supported by blockchain. The platform will be launched in 2023 to target young investors and support the capital market.
Nigeria stock exchange plans to adopt blockchain
The company noted that the primary use of the adopted distributed ledger technology would be to facilitate trade settlements. A report by Bloomberg noted that the exchange would team up with a technology company, and it has predicted that it will receive regulatory approval before the product launches.
“Blockchain technology can facilitate different parts of the capital market, whether around creation of products or facilitation of the Exchange to trade financial assets,” said the CEO of Nigeria Exchange Ltd, Temi Popoola.
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Popoola noted that this move was done to target the young Nigerians who were leaning towards blockchain technology. “We want to see how we can deploy it to grow our market,” Temi added.
In 2021, the company released its first electronic share offering issued by MTN Group Ltd, and the product was 1.2 times oversubscribed. 85% of the investors in this offering were below 40 years.
It has remained unclear if the exchange will interact with cryptocurrency under this offering. If this is the case, it could be required to comply with the regulatory framework set by the SEC and the Nigerian central bank.
The Central bank of Nigeria has not been a great supporter of cryptocurrencies. Last year, the institution banned the banking sector from conducting crypto transactions. The central bank also said that cryptocurrencies were risky to the financial sector. At the time, Nigeria’s SEC said that it had set up the regulatory framework needed to protect investors.
Nigeria also recently launched its central bank digital currency (CBDC) and announced that locals could use it to pay bills and pay for services such as flight tickets and TV subscriptions.
Targeting the young demographic
A report by Paxful estimated that young Nigerians announced the largest volume of cryptocurrency transactions outside of the US. Paxful is a marketplace for Bitcoin trading, and during the first three months of the year, Nigerians traded $185M on the platform, accounting for a quarter of all transactions during the said period.
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