Despite the popularity of cryptocurrencies in the country, the Securities and Exchange Commission (SEC) of Nigeria has no plans to make crypto part of its digital asset trading goals.
That is, at least not until regulators there can agree to standards that keep investors safe, the SEC’s general director said Sunday (Nov. 27).
The SEC is avoiding the digital currency as crypto exchanges still have no access to the banking platform required to drive their trades in Nigeria, Director-General Lamido Yuguda told reporters in Lagos, per a Bloomberg News report.
The commission will promote investment in “sensible digital assets,” with investment protection while also looking into blockchain technology to drive virtual and traditional investment products, Yuguda said.
“The commission is in the business of protecting investors, not in the business of speculation,” he said, alluding to volatility concern in cryptocurrencies.
As the digital assets market evolves, the SEC could promote crypto, said Yuguda, adding that for the moment, “any asset that is traded in the Nigerian capital market requires the joint approach of different regulators.”
Cryptocurrencies have become a part of everyday commercial transactions in Nigeria, so much so that it’s No. 11 in the top 30 countries in Chainalysis’ Global Crypto Adoption Index.
Owen Odia, Nigeria country manager at global cryptocurrency business Luno, said that Nigerians’ fondness for crypto was driven by three factors. First, there’s an interest in currencies like bitcoin as a speculative investment.
In addition, Nigerians see crypto as a hedge against inflation, and a way to make international payments to merchants that don’t accept the local naira currency.
The role digital currencies play in facilitating cross-border international payments cannot be discounted either, making funds move faster and removing the friction experienced by users who would otherwise have to deal with several intermediaries along the way.
“If you’re using your traditional banking system, you probably have to go to three middlemen, and when the money eventually gets to the final beneficiary, you can imagine how much would have been taken from it and the time it would take,” Odia argued.