Nigeria is set to recognize cryptocurrencies with the passage of the 2025 Investment and Securities Bill, defining crypto assets and providing legal support for trading platforms. This shift comes after fluctuating government responses to crypto adoption since 2015. The new legislation aims to modernize regulations, enhance investor protections, and target fraudulent activities, fostering a safer investment environment in the Nigerian capital market.
Nigeria is on the verge of embracing cryptocurrency with the passage of the 2025 Nigerian Investment and Securities Bill, pending the approval of President Bola Tinubu. This legislation will modernize the legal framework established in 2007, providing a clear definition of a crypto asset as a digital representation of value not recognizing fiat equivalents. Additionally, it offers legal support for platforms involved in crypto trading and asset management.
The fluctuating stance of Nigerian authorities on cryptocurrency adoption shifted dramatically since 2015, when economic crisis prompted many citizens to seek refuge in digital currencies following the devaluation of the naira. As a result, Nigeria emerged as a significant player in global cryptocurrency holdings, prompting the Central Bank of Nigeria to impose restrictions that curtailed bank accounts linked to crypto trading. This move pushed traders into underground operations, with platforms like Binance gaining prominence in the market.
Following the appointment of Olayemi Cardoso as the new governor of the Central Bank in 2023, the government initially took a softer approach towards cryptocurrency. However, a crackdown on Binance led to legal troubles for its executives, highlighting ongoing tensions. As governmental agencies attempted to navigate the regulatory environment, the Securities and Exchange Commission (SEC) developed new regulations as part of the reform of the existing investment frameworks.
The modernization of the Investment and Securities Act aims to stimulate the capital market by incorporating new definitions and practices, as stated by Osita Izunaso, the Chairman of the Senate Committee on Capital Markets. Additionally, the bill responds to the rise of financial technology firms that disrupt traditional investment methods. New regulations are expected to formulate a structured market for commodities trading and enable futures markets, expanding investment opportunities.
Regulatory enhancements also target fraud prevention as the SEC has intensified its offensive against illicit investment operations. The introduction of the irregular operator alert exemplifies the commitment to protect investors, while convicts of investment fraud now face up to 10 years in prison. Enhanced provisions for the Investor Protection Fund will provide financial compensation for investors affected by fraudulent activities.
The law is focused on risk mitigation, with the SEC gaining sole authority over corporate mergers and acquisitions while asserting its regulatory stance on listed companies. Nevertheless, concerns persist regarding the SEC’s jurisdiction over financial institutions traditionally overseen by the Central Bank. As Nigeria operates three trading exchanges, the legislation represents an effort to create a sophisticated capital market that supports economic diversification.
In conclusion, the anticipated passage of the 2025 Investment and Securities Bill symbolizes Nigeria’s commitment to embracing cryptocurrency within a legal framework. The reforms aim to enhance investor protection, encourage market innovation, and mitigate investment risks. Furthermore, initiatives to combat fraud reflect a proactive approach in establishing a stable and secure investment environment. Overall, the legislation is poised to significantly impact Nigeria’s capital market and its economic resilience.
Original Source: african.business
