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Blockchain Legislations and Policies in Iraq, Nigeria

Blockchain Legislations and Policies in Iraq, Nigeria

Blockchain Legislation in Iraq by Paul Ugbede

Iraq is a country that has been plagued by political and economic instability for decades and is currently facing a wave of protests against corruption, poor public services and foreign interference. In this context, some activists and entrepreneurs are looking for ways to leverage blockchain technology as a tool for social change and innovation.

Blockchain is a distributed ledger system that records transactions in a secure, transparent and immutable way, without the need for intermediaries or central authorities. Blockchain can enable various applications, such as cryptocurrencies, smart contracts, digital identity, supply chain management and more.

However, blockchain adoption in Iraq faces many challenges both technical and legal. On the technical side, Iraq suffers from frequent power outages, low internet penetration and poor infrastructure, which limit the access and usability of blockchain platforms. On the legal side, Iraq lacks a clear and comprehensive regulatory framework for blockchain and cryptocurrencies, which creates uncertainty and risks for users and developers.

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According to a report by Deloitte, Iraq is one of the countries with the lowest level of blockchain readiness in the Middle East, due to its weak institutions, low innovation capacity and high political risk. The report also states that “instead of pushing the cryptocurrencies to the periphery of financial systems, the central banks and other regulators should embrace them and work towards developing an appropriate regulatory environment that minimizes the risks and maximizes the opportunities”.

According to the World Bank, Iraq’s GDP per capita was $4,452 in 2020, ranking 133rd out of 190 countries. Iraq also suffers from a lack of financial inclusion, as only 23% of adults have an account at a financial institution or with a mobile money service provider. Blockchain adoption and regulation in Iraq are still in their infancy.

There is no specific legislation or authority that governs the use of blockchain or cryptocurrencies in Iraq. The Central Bank of Iraq (CBI) has not issued any official statement or guidance on the legal status or treatment of cryptocurrencies. The CBI has only warned the public about the risks and challenges associated with cryptocurrencies, such as volatility, fraud, money laundering, and terrorism financing.

Some initiatives have been launched to promote blockchain awareness and education in Iraq, such as the Iraqi Blockchain Society, which organizes events, workshops and hackathons to introduce blockchain concepts and use cases to the public. Moreover, some blockchain projects have emerged in Iraq, such as ZainCash, a mobile wallet that allows users to send and receive money using blockchain technology, and Taqanu, a digital identity platform that aims to provide banking and other services to refugees and displaced people using blockchain.

However, these efforts are still limited and face many obstacles, such as censorship, hacking and violence. For instance, during the protests in 2019 and 2020, some activists used blockchain platforms such as Ethereum and Steemit to document human rights violations and share information with the international community. However, they also faced cyberattacks from pro-government forces, who allegedly used Iranian expertise to infiltrate and disrupt their online activities.

Therefore, it is clear that blockchain technology has a lot of potential to improve the social and economic conditions in Iraq, but it also needs a supportive and conducive environment to flourish. This requires more collaboration and dialogue between the government, civil society, private sector and international partners, to develop a legal framework that recognizes and regulates blockchain technology in a fair and transparent way. It also requires more investment and innovation in infrastructure, education and security, to ensure that blockchain platforms are accessible, reliable and safe for all users.

Therefore, Iraq needs to develop a clear and comprehensive legislation on blockchain that can address these challenges and risks, while also promoting the development and adoption of this technology. Such legislation should:

Define the legal status and classification of blockchain and digital assets.

Establish the rights and obligations of blockchain users, providers and regulators.

Provide guidelines and standards for blockchain security, privacy and compliance.

Create incentives and support mechanisms for blockchain innovation and education.

By doing so, Iraq can leverage the potential of blockchain to improve its economic, social and political conditions, and become a regional leader in this emerging technology.

 The 2023 Nigerian National Blockchain Policy by  

The National Blockchain Policy of Nigeria was formally adopted and passed into immediate effect on the 3rd of May , 2023 through an announcement by the Federal Minister of Digital Communications, Isa Patanmi, placing Nigeria in the category of countries like the United Kingdom and the United Arab Emirates that have also adopted Blockchain policies of their own.

This article will be looking at what this means for the Nigerian Fintech Sector in general and the Cryptocurrency business sub-sector particularly from a legal and regulatory perspective.

What is Blockchain?

Blockchain is simply an advanced technology that uses database mechanisms to record transactions in a decentralized public ledger.

Is Blockchain the same as Cryptocurrencies?

No they are not. Cryptocurrencies are however blockchain-based digital currencies in which transactions are verified and records maintained by a decentralized system using cryptography rather than by a centralized authority. 

Which regulatory agencies are in charge of implementing the National Blockchain Policy?

The policy is to be implemented by the National Information Technology Development Agency (NITDA), the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC), the Nigerian Communications Commission (NCC), and the Nigerian Universities Commission (NUC).

Does this policy now mean that Cryptocurrencies have been granted legal tender status in Nigeria?

No. This policy simply allows for the application of Blockchain technology to a wide range of other uses. However, digital assets and Initial Coin Offerings (ICOs) as well as Stablecoins like the E-Naira are supported under related legal frameworks in Nigeria.

What are the exhaustive provisions of the policy?

You will need to consult your lawyer on this.

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