Nigeria has officially recognized cryptocurrencies and other virtual assets as securities under its new capital market laws, marking a significant shift in its regulatory landscape. The Investments and Securities Act (ISA) 2024, signed into law by President Bola Tinubu, repeals the previous 2007 act and introduces provisions that bring digital assets under the regulatory purview of the Securities and Exchange Commission (SEC). This move ensures that businesses involved in digital assets must now register with the SEC and adhere to its guidelines, providing more transparency and helping to combat fraud.
This legislative change follows years of uncertainty surrounding cryptocurrencies in Nigeria. Initially, the Central Bank of Nigeria (CBN) took a hard stance against cryptocurrencies, banning financial institutions from engaging in crypto transactions. Despite this, cryptocurrencies became increasingly popular in Nigeria as the naira depreciated, and many Nigerians turned to digital currencies like Bitcoin as an alternative investment. The new law signals a reversal of the CBN’s stance and a more welcoming approach towards cryptocurrencies, with the potential to stimulate both local and international investments in digital assets.
Key stakeholders in Nigeria’s financial markets have welcomed the new law, describing it as transformative. Emomotimi Agama, Director-General of the SEC, emphasized that the ISA 2024 will enhance investor protection and foster innovation in blockchain technologies. Several capital market professionals, including Oluropo Dada of the Chartered Institute of Stockbrokers, highlighted that the law will create a more robust platform for economic growth, expand investment opportunities, and build confidence in the Nigerian market.
In addition to recognizing digital assets, the ISA 2024 introduces other important reforms. It modernizes the regulatory framework by classifying exchanges into composite and non-composite categories and strengthens oversight of financial market infrastructures. The law also addresses systemic risks, enhances the SEC’s authority, and establishes provisions to combat illegal investment schemes. These reforms aim to align Nigeria’s capital market with global best practices, making it a more attractive destination for investments while ensuring greater transparency and security for investors.
Source: Business day