The Central Bank of Nigeria (CBN), on February 5, 2021, ordered the identification of individuals and platforms engaged in cryptocurrency transactions in a bid to stop its trading and facilitation.
The CBN’s stance was justified, as there was growing risk and a perceived need to control what seemed like an off-the-radar route to evade financial regulation through cryptocurrency transactions. Although the move has sparked outrage, controversy and some setback for the rapidly growing fintech sector, which is believed to have attracted more than $600 million in foreign investment between 2014 and 2019.
In what was seen as an attempt to cushion the crackdown, e-naira was launched on October 25, 2021 as a central bank digital currency (CBDC), issued and regulated by the apex body and pegged to the value of the naira. Although a CBDC is not a cryptocurrency, it is best described as crypto-assets or digital assets. So, within a year, the CBN cracked down on the country’s bustling cryptocurrency pledges, it also became the first African country to have a national digital currency.
On May 11, 2022, the Securities and Exchange Commission (SEC) published rules on the offering of issuance and custody of digital assets on its website. The 54-page document targets sponsors, issuers, national and international platforms that facilitate transactions of digital assets, including cryptocurrencies. In what seemed like a coincidence, these new guidelines came immediately after the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, urged countries to look into the digital future and adopt public digital platforms to connect payment systems. She pointed out that even if the risk of fragmentation exists, it is worth exploring the idea of a platform that connects various forms of money for different categories of people in all countries.
With a growing trend of companies keeping cryptocurrencies as assets, even declaring the same on their balance sheets, it’s clear that the mindset is leaning towards wider acceptance, despite sanctions aimed at discouraging adoption. complete.
For Nigeria, having a very “crypto-vibrant” youthful population implies that supporters of cash will win fewer counterparts. Therefore, organizations must be predisposed, while acquiring the necessary knowledge to take full advantage of the opportunities and the future of digital assets.
Dr Ohaegbu, Principal Consultant and Practice Leader at H. Pierson Associates Limited, wrote from Lagos