Nigeria embraces cryptocurrencies as securities in new law

Nigeria has officially recognized cryptocurrencies and other digital assets as securities under its newly enacted Investments and Securities Act (ISA) 2024, according to a report by Business Day. The law, signed by President Bola Ahmed Tinubu, marks a turning point for the country’s financial landscape by bringing digital assets under the regulatory framework of the Nigerian Securities and Exchange Commission (SEC).

The ISA 2024 replaces the previous legislation from 2007 and broadens the SEC’s authority to oversee activities involving virtual assets. It requires businesses operating in this space, including Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and Digital Asset Exchanges, to register with the SEC and follow its regulations. This move is expected to improve transparency, protect investors, and encourage responsible innovation in blockchain technology.

The new law also introduces tougher penalties for fraudulent schemes, such as Ponzi operations, which have often been associated with cryptocurrency markets. Those found guilty could face prison terms of at least ten years and fines ranging from N10 million ($6,500) to N40 million ($26,000), depending on the severity of their actions.

This development follows years of uncertainty surrounding cryptocurrency regulation in Nigeria. In 2021, the Central Bank of Nigeria prohibited financial institutions from processing cryptocurrency transactions due to concerns about illegal activities and consumer risks. Despite this restriction, Nigeria became Africa’s largest cryptocurrency market by volume and ranked second globally after India, with many citizens turning to peer-to-peer platforms to continue trading.

The enactment of the ISA 2024 reflects a shift in Nigeria’s approach to digital assets. By providing a clear legal framework, the government aims to attract investment and integrate cryptocurrencies into its formal economy. Observers believe this could position Nigeria as a leader in digital finance across Africa while aligning its policies with global trends.