Nigeria Regulates Bitcoin – Bitcoin Magazine
This is an opinion editorial by Heritage Falodun, a Bitcoin consultant and data scientist based in Nigeria.
On May 3, 2023, during a Federal Executive Council meeting presided over by President Muhammadu Buhari at the Council Chamber in Abuja, The Nigerian government approved the official use of blockchain technology in the country.
Nigeria’s Minister of Communications and Digital Economy, Professor Ali Isa Pantami, revealed the official approval of “The National Blockchain Policy For Nigeria,” stated that “the new policy was a product of consultations with 56 institutions and personalities whose ultimate goal is to institutionalize blockchain technology in Nigeria’s economy and security sectors.”
Nigeria’s History of Bitcoin Regulation
Taking a deep dive into understanding the Nigerian government’s disposition towards blockchain-based innovations over the years will paint a clear picture of how crucial and important this recent policy and federal approval is to the Bitcoin space in Nigeria and Africa at large.
On January 12, 2017, the Central Bank of Nigeria (CBN) issued a circular warning financial institutions and the general public about the risks associated with blockchain-based technologies, such as Bitcoin. Building on the previous warning and directive, on February 5, 2021, the Central Bank of Nigeria officially banned banks from facilitating Bitcoin and crypto-related transactions by reissuing the circular – a ban that remains unenforced as at the time of writing.
This restrictive policy came at a time when the adoption of Bitcoin and shitcoin-related activities was on the rise in Nigeria, and it was a restriction that further promoted the use of Bitcoin and stablecoins as users wallowing in the pain of financial restrictions increasingly discovered the power of decentralized Bitcoin innovations, such as peer-to-peer (P2P) marketplaces.
In the midst of all these impromptu regulatory measures, the CBN was apparently busy creating what it considered an alternative to shitcoins: a government-controlled digital currency called e-naira, which was officially launched on October 25, 2021, unequivocally built on a centralized system, not a decentralized blockchain like Bitcoins. Meanwhile, Nigeria’s Security and Exchange Commission (SEC) was busy crafting policy frameworks for token issuing platforms and exchanges.
All these regulatory changes were not unrelated to the government’s awareness of how booming the blockchain industry is in Africa’s most populous country.
What does this mean for Bitcoin in Nigeria?
At this point, one would naturally ask what another regulatory update in national blockchain policy means for Bitcoin.
A quick but detailed answer would be: This is definitely a welcome development for Bitcoin advocates in the country and one of the possibly many steps we may witness in the right direction.
From my interpretation, this policy is more focused on providing a direct government overview to relevant regulatory bodies such as the National Information Technology Development Agency (NITDA), CBN, SEC, Nigerian Communications Commission (NCC) and National Universities Commission (NUC), among many others that is now expected to develop more detailed regulatory frameworks from the use of blockchain-based innovations such as Bitcoin. The government is going from being totally averse to or antagonistic towards Bitcoin, blockchain and crypto-related activities to now accepting them as the default and creating a regulatory environment for them to move forward.
And while altcoins and other developments and products dependent on blockchains other than Bitcoin still have a chance to remain regulated and subject to the directives of these incoming regulations, Bitcoin uniquely repels such regulations.
As a stakeholder in the African Bitcoin space, I must admit that consistent clarity from governments will not only help drive adoption but will also create an enabling environment for Nigerians to incorporate decentralized blockchain technology, such as Bitcoin, in scaling their businesses and ways of life. , at the same time as it opens up a number of legal possibilities for everyone.
As the industry continues to take shape, watch the space as Nigeria’s President-elect Bola Tinubu has promised to enable the proper use of blockchain technology and cryptocurrencies in the country’s banking and finance sector. I am crossing my fingers until we experience full implementation of Bitcoin-friendly regulations in Nigeria.
This is a guest post by Heritage Falodun. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.