Why Nigeria wants to regulate blockchain and crypto

Undoubtedly, Africa has been the battleground for significant crypto assets exchange. South Africa touted to be leading the charge in digital crypto acceptance. Still, in recent months, Nigeria is leading in Africa, making it the home of crypto use in Africa.

Particularly during the related lockdown, social distance measures to curb the spread of the Covid-19 outbreak. That as seen upended the global economy in which several African countries economy is in dwindling condition. Nigeria is one of the severely affected countries by the virus outbreak due to its reliance on crude oil that has seen a global oil crash due to the virus outbreak.

Regarding this, it has resulted in a weak currency and several job losses. This is one reason we have seen the massive turn out of Nigerian youths alternating crypto trading with mitigating the impact of the Covid-19 outbreak across the globe. However, concerning this, the Nigerian government has seen the essential reason to regulate the sectors. According to reports a few weeks ago, the Nigerian government has spotted the potentials due to the growing numbers of Nigerians enthusiasts into crypto and trading these digital assets, so the government had to quickly react to these trends to protect those investing in the sector.

Regarding this, the Nigerian Securities and Exchange Commission (SEC) had to propose a new set of rules that will regulate Crypto-token or Crypto Investments that state when the investments’ character qualifies as securities transactions. The position of the Commission is that virtual crypto assets are securities unless proven otherwise. Thus, the burden of providing the crypto assets are offered is not guaranteed and, therefore, not under the SEC’s jurisdiction, is placed on the issuer or sponsor of the said assets. The renowned Chimezie Chuta, founder Blockchain Nigeria User Group, said –

“The laws are the long-overdue legal framework for this digital asset securities Exchange Commission regulating digital assets and blockchain investments.”

Further said –

“Nigeria has consistently shown that it has a clear understanding of her role in creating a conducive environment for the growth and development of Virtual Financial Assets and Cryptocurrencies in general. Hence this move will, of course, build the much-needed institutional investor confidence for the Nigeria Capital Market and a catalyst for mass adoption of cryptocurrencies in the country”.

However, another critical reason is the penetration and transaction of crypto as been evident over the years. But the pandemic crisis has made it soured in the country according to a report by the State of Play state in recent times, cryptocurrencies as caught the eyes of several African youths over the past five months and a half. Since the pandemic was detected first in the region, these have resulted in all-time highs of Bitcoin adoption in Africa, making it the second-strongest peer-to-peer (P2P) market volume margins.

While the report said that Bitcoin (BTC) peer-to-peer trading volumes record new highs in India, South Africa, Ghana, Kenya, Argentina, Chile, and Nigeria. In contrast, the data compiled from Localbitcoin and Paxful at UsefulTulips.

It was brought to light by an Independent researcher report said the state of cryptocurrency in Africa, in the second quarter of the year, Nigeria led with $34.4 million in peer-to-peer transactional trades, followed by South Africa with $15.2 million, Kenya third with $7.8 million, and Ghana fourth with $640,000. It is quite apparent that the sector is growing at fast-paced in the country.

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