Nigeria News

Nigeria's securities watchdog puts cryptocurrency regulation on hold

ABUJA, Feb 12 (Reuters) - Nigeria’s securities regulator has suspended a planned assessment of cryptocurrency and its dealers after the central bank ordered lenders to close accounts of individuals and entities transacting in or operating in the asset, it said.

The Securities and Exchange Commission (SEC) has sought to regulate cryptocurrency investments on the grounds that they qualify as securities transactions. It assesses crypto products and dealers prior to admitting them for regulation.

“The SEC will continue to monitor developments in the digital asset space and further engage all critical stakeholders with a view to creating a regulatory structure,” it said.

The use of bitcoin, the original and biggest cryptocurrency, has boomed in Nigeria in recent years, driven by payments from small businesses and a weakening naira currency which makes it difficult to get the U.S. dollars needed to import goods or services.

Last week, the central bank barred banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies, warning that banks which fail to act could face “severe regulatory sanctions”.

The SEC said regulation of crypto dealers affected by the central bank’s ban will be put on hold until they can operate a bank account.

The securities regulator said the central bank had identified certain risks within the digital asset sector. It did not provide details of the risks. The central bank has argued that cryptocurrencies, which are unregulated and not legal tender, are risky for the user.

One banking executive, who did not want to be named because they were not authorised to speak to the media, told Reuters that lenders have been closing accounts to ringfence risk because most cryptocurrency dealers were speculating.

The Senate, Nigeria’s upper chamber of parliament, on Thursday issued an invitation to the central bank governor to explain the reasons for the ban as part of an inquiry into the benefits and risks posed by cryptocurrencies. (Reporting by Chijioke Ohuocha; Additional reporting by Camillus Eboh Editing by Alexis Akwagyiram and Jonathan Oatis)