Nigeria’s Securities and Exchange Commission (SEC) is reportedly considering granting licenses to operate digital exchanges backed by asset-backed tokenized offerings including equity, debt, and property. However, the regulator has no plans to green-light cryptocurrency trading, according to Abdulkadir Abbas, head of securities and investment services at the agency. This proposal seems like a clear-lined starting point for the regulator, who aims to simplify the process for market players.
The decision to process applications for digital exchanges on a trial basis comes as Nigeria, one of West Africa’s biggest crypto trading hubs, seeks to broaden market participation. The central bank, however, currently restricts cryptocurrencies in the country. Licensed digital exchanges will undergo one year of “regulatory incubation,” during which they can offer limited services under the SEC’s supervision. By the tenth month, the SEC will determine whether to register the firm, extend the incubation period, or ask the firm to stop operations.
Proponents of this plan argue that it could attract Nigeria’s tech-savvy population to local equities, which have been shunned for years, and boost digital asset usage in the country. Nigeria has the highest volume of completed crypto transactions on peer-to-peer platforms outside the US. Official recognition of asset-backed tokenized offerings may benefit the digital ecosystem and foster the growth of digital investment services.
On the other hand, there’s a hint of skepticism looming over the restrictive stance on cryptocurrency trading. Some view this as a potential stalemate, given the significant traction and demand for cryptocurrencies in Nigeria. A new bill proposed to amend the 2007 Investments and Securities Act could legally recognise the use of Bitcoin and other cryptocurrencies in the country. If passed, SEC’s decision not to allow crypto trading might face criticism for impeding the growth of a thriving digital economy.
While the argument stands to debate whether Nigeria’s SEC decision is a step forward or a stalemate, the growing interest in digital currencies cannot be ignored. It’s crucial for the regulatory body to strike a balance between fostering innovation and implementing necessary safety measures within the digital ecosystem. With the SEC waiting to register digital asset exchanges until it finds common ground with the central bank, this decision is expected to define the future of Nigeria’s digital economy.