The House of Representatives has moved to legalize cryptocurrency in Nigeria, more than a year after the Central Bank of Nigeria (CBN) prohibited financial institutions from carrying out transactions relating to the digital asset.
This was made known to Punch Newspaper on Saturday by the Chairman of the House of Representatives’ Committee on Capital Markets and Institutions, Babangida Ibrahim. He said the change will come when the Investments and Securities Act, 2007 (Amendment) Bill, which will allow the Securities and Exchange Commission to recognize cryptocurrency and other digital assets as capital for investment, is passed and signed into law.
The aim is to change the rules for the Nigerian capital market to be in par with global best practices. One of the bills was named ‘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 the Establishment of the Chartered Institute of Securities and Investments; and for Related Matters.’
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
“We need an efficient and vibrant capital market in Nigeria. 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.
The house committee chairman, who submitted reports on proposals to overhaul the capital market on Wednesday, said there is a need for a new legislation that will regulate the entire crypto industry.
He said that the much needed regulation is not within the purview of the CBN due to its decentralized system, adding that cryptocurrency is not illegal in Nigeria; it only does not have any law backing it up.
“All these are some of the issues that we have considered we have to regulate them. It is not that they are illegal but we don’t have regulation for them. 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,” he said.
The central bank’s decision to prohibit cryptocurrency transactions within regulated financial institutions was a huge setback to the growth of digital assets in Nigeria. The West African country was among the leaders in cryptocurrency trade before the CBN’s directive, which forced Nigerian traders to P2P channels, significantly reducing their trade volume.
The CBN governor Godwin Emefiele further directed commercial banks to close accounts used for crypto transactions. But the Nigerian Securities and Exchange Commission (SEC) had earlier given approval for crypto transactions before the CBN struck, overriding the SEC’s stance.
Analysts believe that the contradicting development happened because there’s no law defining the dos and don’ts of the Nigerian digital market. Although in January, the bill seeking to repeal the Investment and Securities Act 2007 and to enact the Investments and Securities Act, 2021 passed its second reading at the House of Representatives, it is yet to become law.
Early this month, finance minister Zainab Ahmed announced that the federal government, under digital tax, plans to tax cryptocurrency and other digital assets in line with the provision of the 2022 Finance Bill. This means that Nigeria’s cryptocurrency industry and other digital assets will need to be legalized.