Why Nigeria is way ahead of Kenya in crypto regulation

Despite the steep regulatory hurdles crypto exchanges in Nigeria need to scale and a litany of persecutions against some crypto companies, Nigeria nonetheless towers above other African countries in crypto regulation. This is according to the Managing Director of Yellow Card Nigeria, Lasberry Chioma Oludimu who disclosed this to Technext at the sideline of the LightSpark Developers Day which took place in Lagos.

Oludimu, who is also Vice President of Global Operations, said the advancements made by the Nigerian crypto regulators trump what is obtained in most other African countries, especially its illustrious easterly competition, Kenya. She pointed out that Nigeria is currently at the stage where the space is coming into regulation.

She said what currently obtains in the country is the regulatory incubation where the exchanges will get to apply and when they receive approval in principle, they would then operate under the supervision of the Securities and Exchange control for a period of time.

“If the SEC is comfortable with what you have done, they will then allow you to apply for a licence. So the regulatory incubation phase is like a learning ground and also a data-sharing opportunity where the exchanges will share data with the regulator which will also help the regulator to find the best way to regulate the space. So that is where we are in terms of regulation in Nigeria,” – she said.

For Kenya, however, she said the country is still at that stage, where they are still trying to get a bill passed by parliament.

“They have not gotten to where we are. We are actually ahead of them. They do not have a sandbox environment, they do not have any regulation or any implementation. That is why I said we are way above Kenya with what we are doing in Nigeria. In this space, in terms of crypto regulation, Nigeria is the big brother because we have gone way ahead of most other African countries,” – she explained.

Kenya’s crypto regulation

Kenya is the largest cryptocurrency market in East Africa and one of the largest in Africa. According to a 2022 United Nations Conference on Trade and Development report, about 8.5 per cent of the Kenyan population own cryptocurrencies. This is enough to prompt the Finance and National Planning Committee of Kenya’s National Assembly to cast its focus on that space and attempt crypto regulation in the space.

In December 2023, the committee approved the Capital Markets (Amendment) Bill, 2023, (CMAB). However, rather than regulating the industry fully, including approval of exchanges, the regulatory bill was mainly revenue-generating as its main focus was on taxing crypto trading. Thus, the bill introduces taxes on crypto assets that are kept on exchanges and in digital wallets.

Thus, Kenyans who are involved in crypto transactions, including trading cryptos and payments, will be required to pay capital gains taxes. The banks processing the payment are mandated to deduct 20 per cent excise duty on associated fees and commissions. Kenyans who own or deal in digital currencies will be obliged to disclose all such holdings to the Kenya Revenue Authority. The bill also places all digital currencies and blockchain under the oversight of the country’s Capital Markets Authority.

All these, the finance committee said, are aimed at promoting transparency in the crypto market, improving regulatory oversight as well as helping curb crime and terrorism financing. The bill will now proceed to a second reading in the national assembly.

But beyond revenue generation, the Nigerian crypto regulation appears to have focused on the platforms themselves, putting them under the strict oversight of the SEC who in turn had introduced multiple stringent layers for eventual approval and licensing.

The Securities and Exchange Commission (SEC) began the process of regulating the space. This, the commission intended to do, by granting an “Approval-in-Principle” under the Accelerated Regulatory Incubation Program (ARIP) and a models and technology testing program called the Regulatory Incubation (RI) Program.

According to Yellow Card Nigeria MD, Lasberry Chioma Oludimu, the Nigerian regulatory system is so effective, that it is been emulated by other African countries like Malawi.

“I actually had a meeting with the central bank of Malawi and they are learning from what we have done in Nigeria. So it is a big plus for us. We are doing well in terms of crypto regulation and I give the credit to the current DG,” – she said.

Yellow Card’s push for Nigerian licence

Following its $33 million fundraising in October. Yellow Card Regional Manager, West Africa, Uzoma James, disclosed to Technext that the company will actively pursue regulatory approval in Nigeria. According to her, obtaining approval to operate as a licensed business in Nigeria would enhance credibility and allow the company to offer more comprehensive services.

Speaking about the process and which level it is at the moment, Oludimu said it is been processed at the moment.

“What we have at the moment is the ARIP which is the regulatory incubation. We have done all the presentations, filings and all that. We are just waiting to receive our approval. I think they are trying to review the approvals they have given out, the impact and the learnings, from that first cohort. By the time the second cohort will be coming out, it will be better,” – she said.

Three weeks ago in November, Yellow Card announced that it had secured a Crypto Asset Service Provider (CASP) licence in South Africa. The license, issued by South Africa’s Financial Sector Conduct Authority (FSCA), would allow the blockchain-based company to provide crypto and digital assets services in South Africa.

Speaking about the significant accomplishment, Yellow Card’s co-founder and CEO, Chris Maurice, said securing the licence reflects the company’s dedication while underscoring its commitment to its customers.

“The CASP licence underscores Yellow Card’s commitment to its customers in South Africa and regulatory compliance across the continent. This achievement reflects our dedication to providing secure, compliant and transformative solutions for our customers both in South Africa and across Africa,” – he said.

Source: technext24.com

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Samuel

I am a journalist specializing in gambling in Africa and around the world. I am particularly interested in stories about games and casinos.

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Samuel

I am a journalist specializing in gambling in Africa and around the world. I am particularly interested in stories about games and casinos.