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October 30, 2020
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Nigeria regulates cryptocurrencies after bowing to bitcoin adoption

The Securities and Exchange Commission of Nigeria issued guidelines for the cryptocurrency sector after a huge increase in Bitcoin adoption.

In stark contrast to the country’s cynical approach to cryptocurrencies and bitcoin, the Securities and Exchange Commission of Nigeria has moved to regulate the cryptocurrency sector – with the intention of protecting investors and promoting industry standards.

“The general purpose of the regulation is not to stop technology or stifle innovation, but to create standards that encourage ethical practices,” the SEC of Nigeria said in a statement on Monday, adding that it would only regulate “when the character of the investments qualifies. as securities transactions. “

However, according to the regulator, all cryptocurrencies are considered bonds until the contrary is demonstrated. The burden of proof is on cryptocurrency-based exchanges and issuers, which must demonstrate why their cryptocurrency constitutes – or, in fact, does not constitute – a security rating.

The new notices also stipulate that all issuers and blockchain-based companies that deal with cryptocurrencies must register with the SEC.

“These services include, but are not limited to, receiving, transmitting and executing orders on behalf of others, distributors on their own, portfolio management, investment advice, custodian or appointed services,” says the SEC statement.

If you can’t beat them, regulate them

So far, Nigeria’s position on cryptocurrencies has been quite hostile. In 2017, the Central Bank of Nigeria (CBN) issued a circular to all financial institutions banning crypt transactions and operations warning of unregulated exchanges and an alleged susceptibility to criminal abuse.

Still, despite initial reticence towards crypto regulation, the development of Bitcoin adoption by Nigeria apparently forced the hand of its financial authorities.

According to Chainalysis’ 2020 Global Cryptocurrency Adoption Index, Nigeria ranks 8th out of 154 countries for its significant cryptocurrency activity on the network.

Supporting this idea, data from the business analytics website Useful Tulips shows that point-to-point (P2P) Bitcoin trade volumes in Sub-Saharan Africa are some of the highest in the world – second only to North America.

Of the 20 countries in the south of the Sahara, Nigeria is on pole position for Bitcoin P2P trading, with an average weekly volume of $ 7.3 million – below a historical record of $ 10.3 million at the end of July.

With the growing interest in cryptocurrencies in the West African country, it is no surprise that the Nigerian SEC is trying to claim back some appearance of control.

Source: Decrypt

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