As a researcher with a background in financial regulation, I’ve closely followed Nigeria’s evolving approach towards digital assets and cryptocurrencies. The recent update in the country’s regulations is a significant step forward, as it aims to create a more comprehensive and adaptable framework for this dynamic market.
Nigerian regulatory bodies require Virtual Asset Service Providers (VASPs) to make necessary updates to their platforms within a month’s time to adhere to fresh regulations governing the issuance of digital assets, as well as offering and trading platforms, and custodial services.
Nigeria updates crypto regulations
The Nigerian Securities and Exchange Commission (SEC) has made an announcement regarding the upcoming revisions to our digital assets regulations. In a public notice, we detailed our intentions to enhance the existing framework, making it more robust and capable of addressing the intricacies of the dynamic digital asset markets.
I. As a regulatory analyst, I would describe the recent development as follows: The Securities and Exchange Commission (SEC) has launched a new program called the Accelerated Regulatory Incubation Programme (ARIP), which is specifically designed for virtual asset service providers (VASPs). This initiative aims to facilitate a more efficient regulatory process for these entities, enabling them to navigate the complex regulatory landscape associated with digital assets.
The program offers VASPs a structured pathway to align with the country’s new regulatory standards.
As an analyst, I’ve discovered that the Securities and Exchange Commission (SEC) has set up a specific enrollment period for Virtual Asset Service Providers (VASPs) to join the Alternative Trading System (ARIS) platform.
The Securities and Exchange Commission (SEC) has made it clear that they will take enforcement action against any Virtual Asset Service Provider (VASP) that fails to adhere to the guidelines provided in their Circular.
“This regulatory adjustment is part of Nigeria’s efforts to strengthen its supervision over its burgeoning cryptocurrency sector.”
After the selection of Emomotimi Agama as the SEC’s new head, a significant suggestion has emerged: increasing the registration fee for crypto exchanges from 30 million naira ($18,620) to a heftier 150 million naira ($93,000).
Simultaneously with the Securities and Exchange Commission’s (SEC) adjustments, the Central Bank of Nigeria (CBN) has released regulations on banking collaborations and account management for Virtual Asset Service Providers (VASPs) within its borders.
Through a unified approach, Nigeria demonstrates its dedication to overseeing the virtual asset market in a responsible manner, contrasting with the implementation of comprehensive prohibitions.
From ban to taxation
Starting from the year 2021, I’ve observed a significant change in Nigeria’s stance towards cryptocurrencies. At first, the central bank imposed a prohibition on financial institutions, requiring them to cease facilitating transactions involving cryptocurrencies due to apprehensions over potential money laundering and terrorism financing activities.
As a researcher studying the cryptocurrency market, I’ve observed that despite the implementation of bans in certain regions, the adoption of cryptocurrencies has persisted and even thrived. This trend has compelled governments to reconsider their approach and shift towards implementing taxation policies instead. Let me outline some key milestones in this evolving landscape:
- Feb. 5, 2021: The Central Bank of Nigeria (CBN) issued a circular directing banks, non-bank financial institutions, and other financial entities to close accounts associated with cryptocurrency transactions within their systems.
Feb. 9, 2021: The CBN launched an investigation into financial institutions providing services to cryptocurrency traders.
Feb. 11, 2021: The Senate summoned the CBN and the SEC to discuss the potential impacts of cryptocurrencies on Nigeria’s economy and security.
Feb. 18, 2021: The International Monetary Fund (IMF) supported the CBN’s stance, highlighting concerns that cryptocurrencies could facilitate illicit activities. On February 22, 2021, the SEC emphasized the necessity of regulating cryptocurrencies.
Feb. 26, 2021: The CBN clarified its position, stating that while individuals were not prohibited from buying and trading cryptocurrencies, they could not do so through Nigerian banks or fintech platforms.
April 7, 2022: The SEC formally recognized digital assets as securities and issued comprehensive regulations governing the exchange and custody of cryptocurrencies within Nigeria.
April 15, 2021: Discussions between the SEC and CBN regarding cryptocurrency regulation continued, as confirmed by the SEC.
April 26, 2021: The Economic and Financial Crimes Commission (EFCC) warned Nigerians about the risks of investing in Bitcoin (BTC).
July 22, 2021: The CBN announced plans to launch the “eNaira,” a central bank digital currency (CBDC), distinct from Bitcoin and other cryptocurrencies.
Oct. 25, 2021: Nigeria became the first African nation to introduce its digital currency, the “eNaira.”
Dec. 2, 2022: Zainab Ahmed — the Minister of Finance, Budget, and National Planning — disclosed provisions in the latest finance bill to impose taxes on cryptocurrencies and other digital assets.
May 28, 2023: Former President Muhammadu Buhari signed the 2023 finance bill into law, instituting a 10% tax on gains from the disposal of digital assets.
In spite of regulatory hurdles, Nigeria maintains its position as a trailblazer on the global stage for cryptocurrency usage. The value of crypto transactions executed in the country experienced a noteworthy expansion, amounting to $56.7 billion between the periods of July 2022 and June 2023 – representing a yearly growth rate of 9%.
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2024-06-23 18:34