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Nigeria SEC prepares new rules for digital assets

Known as one of the most curious countries in the world when it comes to cryptocurrencies such as Bitcoin (BTC), Nigeria is in the process of drafting new industry regulations for digital asset platforms.

Digital crypto exchanges will need to obtain a license

On May 1, Bloomberg reported that the Nigerian Securities and Exchange Commission (SEC) is considering allowing licensed digital (crypto) exchanges to add tokens backed by certain assets.

According to Abdulkadir Abbas, the head of securities and investments of the Nigerian SEC, the authority only wants to allow listings of tokens based on assets such as stocks, debt or property, with cryptocurrencies such as Bitcoin and Ethereum (ETH) not being among those assets.

The SEC of Nigeria is reportedly seeking to register fintech companies as digital sub-brokers, crowdfunding intermediaries, fund managers and issuers of tokenized coins. The authority will not register crypto exchanges until the central bank establishes clear rules for the crypto market.

Abbas indicated that license applicants would go through a “regulatory incubation” for one year, during which the SEC can scrutinize their activities and approve their services in the country.

By the 10th month we should be able to decide whether to register the company, extend the incubation period or even ask the company to cease operations.

Crypto Adoption High in Nigeria

In early 2021, the Central Bank of Nigeria banned local banks from providing services to cryptocurrency-related platforms, with the regulator highlighting the high risks associated with trading cryptocurrencies such as Bitcoin. The central bank also threatened severe sanctions against any lender or financial institution that does not comply with this directive.

Despite this, Nigeria has emerged as one of the most active countries in terms of adoption and curiosity about Bitcoin and other cryptocurrencies.

According to data sourced from Google Trends, Nigeria ranks 2nd in search interest for the keyword “Bitcoin”, behind El Salvador, which adopted Bitcoin as legal tender in 2021. Other jurisdictions in the top five crypto-curious countries include Slovenia, the Netherlands, and Switzerland. Nigeria was also among the top 20 countries in crypto adoption in 2022, according to Chainalysis’ crypto adoption index.

Despite the ban, the Central Bank of Nigeria has been actively promoting its own digital currency, the eNaira, which has reportedly seen increasing adoption due to national fiat reserves facing severe shortages.

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