The chairman of the House of Representatives Committee and old president of Nigeria, Ibrahim Babangida, has announced that the chamber will soon pass a law that recognizes the usage of cryptocurrencies for Nigeria to stay up to date with “global practices’’.
When signed into law, the Investments and Securities Act, 2007 (Amendment) Bill will allow the Securities and Exchange Commission to recognize cryptocurrency and other digital funds as capital for investment. The proposed law will also define the regulatory roles of the Central Bank of Nigeria and SEC regarding digital currency.
The law is put forth after Nigeria’s eNaira failed to get adopted by the locals, with a slumped adoption rate of 0.5%, a little more than a year after its launch in October 2021.
What is eNaira?
eNaira is Nigeria’s central bank digital currency (CBDC) issued by the Central Bank of Nigeria as a legal tender. It is the digital form of the Naira and is used just like cash. The eNaira wallet is a digital storage that holds the eNaira.
Following the #EndSARS protests in February 2021, the Central Bank of Nigeria (CBN) announced that dealing with cryptocurrencies is illegal in the country. It also ordered the halt of Nigerian crypto exchanges and service providers, mandating that banks and other financial institutions identify entities operating cryptocurrency exchanges or engaging in trading activities and close their accounts.
After almost 24 months, in an interview, Babangida stressed the need for Nigeria to keep up to date with global economic innovations:
“Like I said earlier during the second reading, 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. Like I said, it is better to talk about this after consideration of the reports.”
Also, he added:
“It is not about [the] lifting of the ban, we are looking at the legality: what is legal and what is within the framework of our operations in Nigeria. The CBN is regulating financial markets and the Securities Exchange Commission regulates the capital market. When cryptocurrency 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.’’
The law, when passed, will legalize the recognition of cryptocurrencies and describe the regulatory roles of the central bank of Nigeria and Nigeria’s Securities and Exchange Commission (SEC) and their relation to digital currencies.
Studies showed that Nigerian residents are the most crypto-curious nation. Even after the ban on cryptocurrencies in Feb 2021, traders continued to increase in number, marking their government’s efforts as amiss. That only sounds fair considering the rampant inflation and economic malaise Nigerians are trying hard to live through.