(Kitco News) –
According to a local report published on Sunday, Babangida Ibrahim, Nigeria’s Chairman of the Committee on Capital Markets and Institutions, said that the country’s House of Representatives is planning to pass new legislation which will allow a range of uses for cryptocurrencies in Africa’s largest economy.
Once passed and signed into law, the Investments and Securities Act, 2007 (Amendment) Bill will allow Nigeria’s Securities and Exchange Commission to recognize cryptocurrencies and other digital assets as “capital for investment.” It will also define the regulatory roles of the SEC and the Central Bank of Nigeria (CBN) as they pertain to crypto.
On Wednesday, Ibrahim submitted reports on two bills designed to reform Nigeria’s capital markets.
The first piece of legislation was entitled ‘A Bill for an Act to Repeal the Chartered Institute of Stockbrokers Act, Cap. C9, Laws of the Federation of Nigeria, 2004 and Provide for Establishment of Chartered Institute of Securities and Investments; and for Related Matters.’
The second was titled, ‘A Bill for an Act to Repeal the Investments and Securities Act, 2007 and Enact the Investments and Securities Bill to Establish Securities and Exchange Commission as the Apex Regulatory Authority for the Nigerian Capital Market as well as Regulation of the Market to ensure Capital Formation, the Protection of the Market to ensure Capital Formation, the Protection of Investors, Maintain Fair, Efficient and Transparent Market and Reduction of Systematic Risk.’
Previously, the CBN had ordered banks and other financial institutions to “identify persons and entities operating cryptocurrency exchanges and close all such accounts.” The central bank said at the time that exchanging and facilitating payments through cryptocurrencies is against the law.
Ibrahim told the local correspondent on Saturday that Nigeria must keep up with global economic innovation.
“We need an efficient and vibrant capital market in Nigeria,” Ibrahim said. “For us to do that, we have to be up to date [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.”
Ibrahim said that digital currencies are classified differently depending on the jurisdiction, but they don’t recognize boundaries. “You can stay here in Nigeria and invest in the United States, Canada or anywhere,” he said.
“They are digital. That is why, when crypto currency was initially banned in Nigeria, the CBN discovered that most of these investors don’t even use local accounts. So, they are not within the jurisdiction of the CBN. Because they are not using local accounts, there is no way the CBN can check them.”
He said lawmakers were forced to considere these and other issues in the process of drafting regulation. “It is not that they are illegal, but we don’t have regulation for them,” he said. “So, these are some of the reasons why we need to review the Act and put some regulations for most of the activities – derivatives, commodity exchanges, digital currencies and so many other things.”
Ibrahim clarified that the focus is not on lifting the ban, but looking at the framework for regulation of cryptocurrencies. “CBN is regulating financial markets and the Securities Exchange Commission regulates the capital market,” he said.
Nigeria was one of the first countries in the world to launch a central bank digital currency (CBDC), with CBN releasing the eNaira in Oct. 2021. The public’s uptake of the CBDC has been very low, however, with only 0.5% of Nigeria’s population currently using the digital currency in their everyday lives.
This has forced the Central Bank of Nigeria to take the drastic measure of reducing the amount of cash that citizens can withdraw from their bank accounts in an attempt to push its “cash-less Nigeria” policy and increase the use of the eNaira.
According to the directive released by CBN, individuals and businesses are now limited to withdrawing $45 (20,000 Nigerian nairas) per day and $225 (100,000 nairas) per week from ATMs. For bank accounts, the limits are set at $225 (100,000 nairas) per day and $1,125 (500,000 nairas) per week. If they exceed the prescribed limits, individuals will pay a 5% fee while businesses will be charged 10%.
The population of Nigeria is considered to be the most crypto-savvy on the African continent, with the nation ranking as the top country in Africa for crypto adoption and 11th globally. More than a third (35%) of the Nigerian population between the ages of 18 and 60 reported owning or trading cryptos in 2022.
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