Hello Bitcoin World, the government is coming. Yes, the European Union is going to regulate crypto assets. You may not blame the government when you see the level of wash trading (buy from one broker, sell via another to distort price) happening in the unregulated crypto world. You will expect better collacterization disclosures now. 

Last month, Microstrategy’s CEO Michael Saylor called on governments to step in and save the crypto industry from total collapse by cracking down on crypto industry’s shaky practices. It is a call that has been widely debated, but the U.S. and other leading economies have been dragging feet, focusing only on combating the use of cryptocurrencies to evade tax, launder money and sponsor terrorism.

Based on months of relentless bear market that saw the crypto industry lose about $2 trillion of its value, the European Union is moving to enact a set of laws that will regulate the industry.

Reuters reports below that the bloc has agreed on ground-breaking rules for regulating crypto assets, according to a statement issued by the EU lawmakers on Thursday.

The fact is that economies could be affected if people use fiat currency to collateralize trading of altcoins, and during deteriorating margin calls, are asked to come clean. This is why regulation is important.

Today, many brokers require BTC (bitcoin)  and that is why BTC  price correlates with altcoins: if you buy altcoin via margin  and the broker requires BTC for collateral, if that altcoin fades, you must sell BTC to compensate. Magically, the “finite” BTC begins to behave like most altcoins on price elasticity.

People, one thing is evident if you read AO Lawal’s Economics textbook in secondary school, you would have noticed that over time, equilibrium is attained in markets. For Bitcoin and cousins, a government fudge factor via regulation could make that happen. And just like that, Bitcoin becomes another asset class with boring returns but earthly loss barometer. That may not be a bad outcome!

EU Agrees to Tame ‘Wild West’ Crypto Market with Regulations

Amid the crash of the crypto market that has resulted in massive loss of investors’ funds, the call for government’s regulation of the industry has never been louder.

Last month, Microstrategy’s CEO Michael Saylor called on governments to step in and save the crypto industry from total collapse by cracking down on crypto industry’s shaky practices. It is a call that has been widely debated, but the U.S. and other leading economies have been dragging feet, focusing only on combating the use of cryptocurrencies to evade tax, launder money and sponsor terrorism.

Based on months of relentless bear market that saw the crypto industry lose about $2 trillion of its value, the European Union is moving to enact a set of laws that will regulate the industry.

Reuters reports below that the bloc has agreed on ground-breaking rules for regulating crypto assets, according to a statement issued by the EU lawmakers on Thursday.

Representatives from the European Parliament and EU states thrashed out a deal on the markets in crypto assets (MiCA) law, which is expected to come into force around the end of 2023.

“Today, we put order in the Wild West of crypto assets and set clear rules for a harmonized market,” said Stefan Berger, the center right lawmaker who led negotiations on behalf of the parliament.

“The recent fall in the value of digital currencies shows us how highly risky and speculative they are and that it is fundamental to act,” Berger said.

MiCA will be the first comprehensive regime for crypto-assets in the world and will contain strong measures to guard against market abuse and manipulation, added Ernest Urtasun, a Green Party lawmaker in the parliament.

The new law gives issuers of crypto assets and providers of related services a “passport” to serve clients across the EU from a single base, while meeting capital and consumer protection rules.

The United States and Britain, two major crypto centers, have yet to approve similar rules.

Crypto assets came under pressure after the collapse of TerraUSD and luna tokens last month, with major US cryptocurrency lending company Celsius Network this month freezing withdrawals and transfers.

Bitcoin collapsed this month to around $17,600, and was trading around $18,900 on Thursday, well below its late March level of $48,200 as investors nurse losses.

Negotiations on Thursday focused on issues such as supervision and energy consumption of cryptoassets.

“We have agreed that crypto asset providers should in future disclose the energy consumption and environmental impact of assets,” Berger said.

EU states will be the main regulators for crypto companies, though the bloc’s securities watchdog ESMA will have powers to step in if investor protection or financial stability is threatened, lawmaker Urtasun said.

What is innovation? And what is an “interest”? For the second one, I will explain using data from INEC registrations in Sokoto and Zamfara States. The two states which have been unable to register secondary school students, in public schools, to take WAEC exams, for two years running, are outperforming many states on voter registration per capita. In other words, Sokoto and Zamfara States can mobilize people to register to vote but cannot find ways to register students to take WAEC exams despite the students having prepared for the same exams for 6 years!

For the first part, I take you to the performance of Nigerian banks, using Nairametrics data. Interestingly, the old innovator and the god-zilla of excellence, GTBank*, seems to have lost grounds. It is unbelievable that you can have a plot in Nigerian banking where GTBank* is not in the top three on the innovation side.

Below are the leading banks between March 2022 and December 2021.

Total Assets growth

• First position – Fidelity Bank (+22.9%)
• Second position – Zenith Bank (+18.9%)
• Third position – Stanbic IBTC (+13%)
• Fourth position – Unity Bank (+9.7%)
• Fifth Position – Wema Bank (+7.7%)

Customer Deposits growth

• First position – Zenith Bank (+27.8%)
• Second position – Fidelity Bank (+18%)
• Third position – Unity Bank (+17.4%)
• Fourth position – Wema Bank (+8.8%)
• Fifth Position – Access Bank (+7.8%)

Customer Deposits growth

• First position – Zenith Bank (+27.8%)
• Second position – Fidelity Bank (+18%)
• Third position – Unity Bank (+17.4%)
• Fourth position – Wema Bank (+8.8%)
• Fifth Position – Access Bank (+7.8%)

Loan book growth

• First position – Fidelity Bank (+28%)
• Second position – Zenith Bank (+25%)
• Third position – Unit Bank (+11.9%)
• Fourth position – UBA (+7.1%)
• Fifth Position – Stanbic IBTC (+6.4%)

Profits After Tax (PAT) growth

• First position – Wema Bank (+119%)
• Second position – First Bank (+108%)
• Third position – Sterling Bank (+47.9%)
• Fourth position – FCMB (+44.6%)
• Fifth Position – FBNH: (+33.9%)

Cost-to-income ratio performance

• First position – First Bank (-12.48%)
• Second position – FCMB (-6.83%)
• Third position – Wema Bank (-5.5%)
• Fourth position – Stanbic IBTC (-5.4%)
• Fifth Position – Sterling Bank (-2.1%)

Return on Equity (ROAE)

• First position – Access Bank (21.39%)
• Second position – UBA (20.4%)
• Third position – GT Bank (19.3%)
• Fourth position – Zenith Bank (19.2%)
• Fifth Position – Wema Bank (15.96%)

From what we can see here, the following are evident

• Fidelity Bank is looking amazing, outflanking to outperform.
• Wema Bank – the preferred bank for Nigerian fintech startups – is showing great promises. This bank could be exceedingly profitable when most of its leverages begin to compound.
• Zenith Bank has solidified its position as Nigeria’s leading banking institution.

The past is history, the future is unborn and full of promises.  Commit to innovate, with the right interest,  because the future is unbounded.

Comment on LinkedIn Feed

Comment: Prof Ndubuisi Ekekwe, Great insight! I particularly love the discuss on innovation. What amazes me is how Wema Bank Plc. has carved a good spot for themselves in the Nigerian fintech space effectively being the banking layer for a lot of startups. Their position means as these startups grow in revenue, they grow in profits.

Quick question prof, is Wema bank’s strategy part of your fintechnolocalization postulate?

My Response: Since it is a bank, we cannot use fintechnollization for it. It is already a financial services provider. Nonetheless, I see “two companies” in Wema Bank – the bank with those buildings and the Wema Platform which powers fintechs. If Wema Platform is a seperate company, it can command more than $1 billion in New York. At Tekedia Capital, we will be open to invest in it at a valuation of at least $1 billion. 

The fintechs of the future live on Wema Platform and what that means is that Wema will extract the profit layers of many fintechs, “taxing” them at scale. That is where you want to be. Wema is a “software-banking” company which is a solid platform. I admire it. But it has to unlock leverages and compound them better.

Across many cities in Africa, Tekedia Institute learners are registering local alumni associations. Tekedia Institute approves those – and whenever they come to you for any benefit which non-profit alumni associations deserve, give those to them.

And when they come to events on our T-shirts, just note one thing: many learners do treasure the experiences they have gained from our Institute and are evidently proud to wear those shirts.

If you are yet to experience Tekedia Mini-MBA quality, register for the next edition here . We will graduate more learners than any university in Africa this year!