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In light of a recent court ruling in Illinois classifying Bitcoin and Ether as commodities, Nigerian stakeholders are advocating for the Nigerian Securities and Exchange Commission (SEC) to adopt a similar approach in its regulatory framework.
As cryptocurrencies increasingly influence the global financial landscape, the call for clear and proper classification grows louder. Lucky Uwakwe, chairman of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), highlighted the necessity of defining the class of crypto assets in an interview.
Need for Clear Guidelines
Uwakwe emphasized that clear guidelines would provide creators with a transparent pathway for regulation.
“The Nigerian SEC should focus on making rules that define the asset class of crypto assets or break respective crypto into asset classes and explain to the public how such crypto qualifies as securities or commodities,” he said.
He also pointed out that while the US SEC and the Commodity Futures Trading Commission (CFTC) consider Bitcoin and Ether as commodities, the distinction between proof-of-stake (PoS) and proof-of-work (PoW) protocols might affect the classification of specific crypto assets.
Advocacy for Individual Scrutiny of Cryptocurrencies
Oladotun Wilfred Akangbe, chief marketing officer at Flincap, a platform for African over-the-counter crypto exchanges, highlighted the complex nature of cryptocurrencies and the varied interests from multiple Nigerian governmental bodies.
“Foundational cryptocurrencies such as Bitcoin and Ethereum have become very valuable commodities, so much so that assets are priced in them,” Akangbe noted. He stressed the need for distinct regulatory approaches for Bitcoin and Ethereum compared to other cryptocurrencies.
Akangbe suggested that the SEC should primarily focus on using cryptocurrencies as fundraising instruments, such as initial coin offerings (ICOs). Another local crypto analyst, Rume Ophi, argued that each cryptocurrency is unique and should be scrutinized individually to determine whether it qualifies as a security or a commodity.
Implications for Nigeria’s Regulatory Framework
These stakeholders’ recommendations are crucial as Nigeria seeks to establish a comprehensive regulatory framework for digital assets. By considering Bitcoin and Ether as commodities, the Nigerian SEC can provide much-needed clarity and stability in the market, encouraging innovation while ensuring regulatory compliance.
In Nigeria, the Commodity Board has traditionally focused on physical commodities like cash crops and agricultural products, showing little public interest in digital commodities to date. However, as the digital economy expands, adapting regulatory frameworks to include digital assets will be essential for fostering growth and maintaining market integrity.
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