Nigeria to allow Bitcoin, anti-crypto policy proved a failure

Nigerian anti-crypto policy doesn't work. The authorities decided to allow Bitcoin again to fit in with the trends in the global financial markets.

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The Nigerian government is reconsidering its ban on cryptocurrencies introduced in February 2021. The news was revealed by a local newspaper. The report quotes Ibrahim Babangida, the Chairman of the House of Representatives Committee on Capital Market and Institutions, who disclosed that a bill amending the Investments and Securities Act, 2007, is being proceeded in the parliament.

Once the new law is passed and signed, it will "allow the Securities and Exchange Commission to recognize cryptocurrency and other digital funds as capital for investment." The amendment also regulates the roles of the Central Bank of Nigeria (CBN) and SEC in overseeing digital currencies.

The new legislation is a surprising retreat from the anti-crypto course the CBN took last year, declaring the use of cryptocurrencies "a direct contravention of existing law" and prohibiting commercial banks from dealing in "coins." The move proved a failure, as crypto users turned to decentralized, peer-to-peer platforms, such as Local Bitcoins and Paxful.

Read also: Bitcoin is at its lowest point since December 2020

The rationale behind the ban was that digital assets pose a financial risk for both individual investors and the whole economy, and facilitate money laundering and terrorism financing. In reality, the Nigerian government has deemed cryptocurrencies an inconvenient free-market competition to eNaira, the Nigerian CBDC that has been struggling to garner the attention of crypto users.

Read also: Nigeria poised to power its economy with blockchain, $1.76 trillion at play

Nigerians have been reluctant to accept the government-issued means of payment but readily embraced real-deal cryptocurrencies. According to The 2021 Global Crypto Adoption Index Top 20 published by Chainanalysis, Nigeria ranks sixth worldwide by the crypto adoption level.

Crypto adoption ranking

Now, Nigerian authorities seem to have realized that they need to adapt to changes taking place in the global financial markets. "We need an efficient and vibrant capital market in Nigeria. For us to do that, we have to be up to date [with] global practices. In recent time, there are a lot of changes within the capital market, especially with the introduction of digital currencies, commodity exchanges and so many other things that are essential, that need to be captured in the new Act," said Ibrahim.