Nigeria and central Africa diverge on crypto regulation

The market regulators of Nigeria and nations across central Africa have reiterated their cautious stance on cryptocurrency, albeit with different outcomes.

Nigeria’s Securities and Exchange Commission (SEC) published the “New Rules on Issuance, Offering Platforms and Custody of Digital Assets” over the weekend, which lays out stringent rules for crypto companies looking to operate legally in the country. 

Digital asset exchanges will not be able to facilitate trading unless they receive a “no objection” verdict from the commission and pay a registration fee of 30 million naira (US$72,289).

The 54-page document also stipulates that exchanges registered in Nigeria need a minimum of NGN 500,000 (US$1,204) in paid-up capital and they must post a fidelity bond for at least 25 per cent of this sum.

While the SEC acknowledges digital assets as securities, it requires crypto firms to be “fair, reasonable, and transparent” with their fees.

The move towards regulation amid a market downturn may be lauded as a step in the right direction, especially considering that in March last year Nigeria’s central bank issued a blanket ban on financial institutions dealing in digital currencies. 

A shift was apparent in October, when the country back-pedaled to introduce its own state-controlled digital currency, the eNaira, in a bid to keep up with the rapidly evolving fintech landscape.

Meanwhile, in nations across central Africa, no such progress has been made. 

The Banking Commission of Central Africa (COBAC) recently reminded members of the Economic and Monetary Community of Central Africa (CEMAC) that a ban on cryptocurrencies remains in effect. The regional regulator believes that prohibition is necessary to ensure the financial stability of the bloc and to protect consumer investments. 

This warning comes after the Central African Republic (CAR) decided to adopt Bitcoin as a legal tender in April, which does not sit well with the Bank of Central African States (BEAC). The lender is urging the nation to annul the newly-accepted crypto, and instead focus on implementing poverty-targeted monetary policies in line with CEMAC.

The six-member economic community includes the Central African Republic, Cameroon, Chad, Equatorial Guinea, Gabon, and the Republic of the Congo.