Nigeria is poised to recognize cryptocurrencies with the 2025 Nigerian Investment and Securities Bill, which defines crypto assets and regulates trading platforms. The SEC aims to modernize capital market practices, combat fraud, and enhance investor protections. The bill addresses challenges posed by the fintech sector and strives to strengthen Nigeria’s financial market framework.
Nigeria is on the brink of officially recognizing cryptocurrencies through a recently passed bill, the 2025 Nigerian Investment and Securities Bill. Awaiting President Bola Tinubu’s signature, this bill replaces outdated legislation from 2007 and defines crypto assets as digital representations of value for payment and investment, excluding digital fiat currencies. The new law aims to legitimize exchanges and platforms involved in crypto trading and storage.
The evolution of Nigeria’s stance towards cryptocurrencies has been tumultuous. Initially cautious due to rising adoption post-2015 linked to the decline in oil prices and the naira’s depreciation, the demand for cryptocurrencies surged. This demand strained foreign exchange reserves, prompting the Central Bank of Nigeria (CBN) to push banks to sever ties with crypto trading, effectively forcing the activity underground and fostering peer-to-peer exchanges, notably dominated by Binance.
With the changing government administration in 2023, there was an initial relaxation on crypto regulation. However, soon after, the CBN escalated actions against Binance, leading to a prolonged dispute that involved international diplomatic negotiations. At the same time, the Nigerian Securities and Exchange Commission (SEC) sought to establish regulatory frameworks to manage the evolving crypto landscape, leading to the new Investment and Securities Act.
The modernized legislation aims to enhance market practices, protect investments, and streamline capital market operations. Significant opportunities for growth and diversification are anticipated, as stated by Osita Izunaso, chairman of the Senate Committee on Capital Markets, who emphasized the importance of investor-friendly regulations.
Recent regulatory shifts arise in part due to fintech innovations that challenge existing definitions and services, with companies like PiggyVest, Cowrywise, and Bamboo broadening investor access to financial markets. The reforms include establishing commodity trading frameworks, a futures market for currencies, and heightened regulation for municipal borrowing to ensure sustainability.
Efforts to combat investment fraud have intensified, with the SEC introducing tools to alert the public about risky investments. Convicts for investment fraud may now face up to 10 years in prison, and the Investor Protection Fund’s scope has expanded to cover losses from registered firms that lose their licenses. Emomotimi Agama, the SEC director general, noted the bill’s critical provisions for investor compensation and its intent to bolster financial stability.
The SEC’s exclusive authority to oversee corporate mergers alongside expanded oversight of publicly listed firms has triggered some concerns from the CBN regarding regulatory overlaps. Presently, Nigeria’s capital market consists of three main exchanges: the Nigerian Exchange for stocks and bonds, the FMDQ for fixed-income and forex trading, and the NASD for unlisted company shares. The SEC views the new legislation as essential for establishing a world-class capital market to support Nigeria’s economic diversification initiatives.
Nigeria is set to advance its regulatory framework for cryptocurrencies and the broader financial market through the 2025 Nigerian Investment and Securities Bill. The changes aim to enhance investor protections, streamline trading, and foster fintech innovations while addressing challenges related to fraud and market regulation. The focus on a legitimate and organized capital market is crucial for Nigeria’s economic growth as it adapts to evolving global financial landscapes.
Original Source: african.business
