Nigeria’s new 2025 Investment and Securities Bill will legitimize cryptocurrencies, defining them distinctly and establishing legal frameworks for their trade. This legislation reflects a shift toward modernization and investor protection in Nigeria’s capital market, aimed at enhancing economic stability and growth while addressing financial fraud and misuse.
Nigeria has taken a notable step towards recognizing cryptocurrencies through the recent passage of the 2025 Nigerian Investment and Securities Bill. This legislation, awaiting President Bola Tinubu’s approval, will replace the outdated 2007 law. The bill defines crypto assets as “a digital representation of value that can be transferred, digitally traded, and used for payment or investment purposes,” explicitly excluding digital versions of fiat money from this classification.
Initially, Nigeria’s response to cryptocurrencies was steeped in panic following a surge in adoption linked to economic decline after the oil price collapse and currency devaluation. In response to a soaring demand for alternative currencies, the Central Bank of Nigeria prohibited banks from servicing accounts related to cryptocurrency trades, causing trading to shift underground, notably using peer-to-peer platforms.
The change in government leadership in mid-2023 marked a shift in attitude towards cryptocurrencies; however, new crackdowns were imposed on platforms like Binance, leading to the detention of executives amid accusations of financial misconduct. Following these events, the Nigerian Securities and Exchange Commission (SEC) sought to devise regulatory measures that would both govern crypto assets and modernize the capital market.
Chaired by Osita Izunaso, the Senate Committee on Capital Markets highlighted the potential of this legislation to stimulate growth within the capital market. New regulations introduced under the bill will also cater to fintech companies, enhancing investment opportunities for retail investors through platforms offering access to diverse asset classes.
The reformed law will facilitate the trading of agricultural commodities, a futures market for currencies, and impose further regulations on governmental financing through bonds to ensure sustainable debt levels. With aggressive anti-fraud measures in place, including stricter penalties for Ponzi schemes, the SEC aims to protect investors fiercely.
Under the new bill, the Investor Protection Fund will expand its coverage significantly, providing compensation for losses from licensing issues faced by brokerage firms, a step-up from the previous law’s limitations. This evolution in regulatory oversight will place sole authority on the SEC for corporate mergers and acquisitions, addressing previously overlapping regulatory concerns with the Central Bank.
Currently, Nigeria hosts three trading exchanges, primarily between the Nigerian Exchange and other platforms focused on niche securities. The proposed legislation aligns with the aspirations for building a world-class capital market conducive to Nigeria’s economic diversification.
In conclusion, Nigeria’s passage of the 2025 Nigerian Investment and Securities Bill marks a significant regulatory framework that recognizes cryptocurrencies. This legislation aims to modernize the Nigerian capital market, with enhanced protections for investors and stricter measures against financial fraud. The amendments signify a commitment to fostering a robust economic environment while also addressing the challenges associated with cryptocurrencies and emerging fintech. The overall goal is to stimulate investment, facilitate market growth, and protect investors in a changing financial landscape.
Original Source: african.business
