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- Crypto is now categorize as securities under a new law in Nigeria, with the SEC regulating the market.
- Ponzi schemes are now considere a new law that prescribes imprisonment for anyone who engages in it for up to 10 years and a fine of up to N40 million.
- The market capitalization of cryptocurrencies in Nigeria has hit $59 billion due to inflation and the devaluation of the national currency, the Naira.
Nigeria’s President Bola Tinubu has signed the Investments and Securities Act 2024 into law, which ushers in the regulation of cryptocurrencies in the country. This new law categorises cryptocurrencies as securities and gives the authority to regulate them to the Nigerian Securities and Exchange Commission (SEC), a local news source reports.
The law repeals the Investments and Securities Act (ISA) of 2007 to enhance the SEC’s role in the regulation of capital markets in Nigeria. This involves enhanced scrutiny of the cryptocurrency exchanges as well as increased penalties for Ponzi schemes, which are related to the crypto market.
In the new law, those who would be prosecuted for running Ponzi schemes could end up facing long prison stays of at least 10 years. They will also face high penalty charges ranging from N10 million (about $6500). In more severe cases, monetary sanctions may be higher and can go up to N 40 million (equivalent to $26000).
Naira Devaluation Drives Demand
The use of Bitcoin is gradually trending up in Nigeria because of the high inflation rate and the devaluation of the naira against the dollar since mid-2023. Currently, in Nigeria, citizens have resorted to exploring an alternative, safer way of saving their money through the use of cryptocurrencies.
A report from Chainalysis notes that Nigeria will be rank among the countries that transacted $59 billion in cryptocurrencies in the period from July 2023 to June 2024, showing how crucial the crypto market is to Nigeria.
Source: Chainalysis
Crypto Regulation Reforms
The new law is also connected with the rest of President Tinubu’s economic liberalization programme. Since 2023, he has focused on the fiscal adjustments, such as tax administration reforms, to contain Nigeria’s budget deficit and enhance revenue. Nigeria’s move to regulate the industry means that the country has aligned with other jurisdictions like the European Union that have sought to place similar regulatory measures under the Markets in Crypto-Assets.
By enacting this law, Nigeria targets improving the conditions for investing in cryptocurrency in the country. The new regulation, which is likely to reduce illicit actions within the crypto market, will be supervise and implemented by the SEC. These measures will not only safeguard the investors but will also generate a more sustainable model for the expansion of digital financial markets within Nigeria.
