Nigeria is set to recognize cryptocurrencies through the new 2025 Investment and Securities Bill, defining crypto assets for trading and investment. The Bill aims to modernize capital market practices, enhance investor protection, and combat fraud. This legislative shift follows historical fluctuations in cryptocurrency regulation, driven by economic factors and the rise of fintech firms offering innovative investment solutions.
Nigeria is poised to embrace cryptocurrencies through the newly passed 2025 Nigerian Investment and Securities Bill, pending President Bola Tinubu’s approval. This legislation defines crypto assets as digital representations of value that can be traded and utilized for payments or investments, notably excluding digital fiat currencies. Moreover, it legitimizes platforms and exchanges for the trade, management, and secure storage of digital assets.
Historically, Nigeria’s regulatory environment regarding cryptocurrencies fluctuated following rising adoption post-2015, particularly after the crude oil price collapse and the naira’s depreciation. The Central Bank of Nigeria took measures to curb cryptocurrency trading by directing banks to shut down accounts associated with such activities, instigating a migration towards underground trading practices, primarily facilitated by peer-to-peer platforms.
Under President Tinubu’s administration, the perspective on cryptocurrencies softened initially but shifted following government crackdowns on exchanges like Binance. The Securities and Exchange Commission (SEC) embarked on regulatory adjustments, ultimately leading to the introduction of the new 2025 Bill, which aims to modernize capital market practices and enhance investment protection, according to Osita Izunaso, chairman of the Senate Committee on Capital Markets.
The evolving financial landscape prompted the rise of fintech firms providing innovative services. Such companies, including PiggyVest and Cowrywise, offer competitive returns through investments in government and corporate debts, thereby entering the investment space that was previously limited. The new legislative framework would also establish a trading market for commodities, enhancing supply chain dynamics within the agricultural sector.
Moreover, the SEC has intensified efforts to combat investment fraud by establishing an “irregular operator alert” to notify the public of dubious schemes. The new legislation empowers SEC with greater authority to impose severe penalties for fraudulent activities, including prison terms up to ten years for Ponzi scheme operators. It also expands the Investor Protection Fund’s mandate to reimburse investors for losses caused by brokerage license revocations.
Concerns have been raised regarding the SEC’s regulatory authority, particularly in relation to banks and financial institutions overseen by the Central Bank. The Bill’s passage is considered a significant step toward establishing a world-class capital market, facilitating Nigeria’s economic diversification and providing a safer environment for investors.
In conclusion, Nigeria’s 2025 Investment and Securities Bill marks a pivotal advancement in recognizing cryptocurrencies and enhancing regulatory frameworks. This legislation aims to bolster investor protection while adapting to technological advancements within finance. Furthermore, it signifies Nigeria’s commitment to developing a robust capital market conducive to economic growth and diversification. As the Bill awaits the President’s signature, its implementation may redefine Nigeria’s financial landscape.
Original Source: african.business
