September 2020 in Nigeria came with good news on cryptocurrency to be treated it as securities. What if we are going to see a new era for the fintech sector on the continent? As per the ruling, blockchain and crypto companies are required to be registered with the SEC. As investment schemes, there are ICOs and security token issuances.
Whether these virtual crypto assets are securities leaving confusion to regulators that seems to be proved by issuers themselves. Actually existing digital asset offerings have three months time to file a registration with the SEC as per the market regulator. In order to improving the standards of the technology, the regulation is supposed to play a vital role indeed.
Nigerian Senate and people were highly alarmed at the danger of Bitcoin few years back, and now it’s a quite volte-face from that mind setup where Bitcoin was thought to be a financial scam by their lawmakers. Now the way is clear for the cryptocurrency to proliferate throughout Nigeria with the help of SEC.
State of African regulation
People were sinking into the realm of confusion about the future of cryptocurrency when pan-African commercial bank and Ecobank released a wide-ranging report on the cryptocurrency two years back. As the report was created depending on the cryptocurrency regulation focused on 39 of the continent’s 51 countries, only two nations, South Africa and Switzerland, were found to have a permissive regulatory structure where the other 21 countries had no official stance on crypto. And Namibia banned cryptocurrency.
But many Africans consider both the risks and potentiality of cryptocurrency. Considering the issue of lacking of user protection, Burundi banned cryptocurrency transactions in September 2019. The issue of user protection that Burundi took under consideration was from its viewpoint. Why do they think so? It is visibly because they had not set up any firm cryptocurrency regulation. How Burundi would have benefit from this nascent sector without strong regulatory guidance? Rather without strong guidance, such technology sector will become costly for them.
Origination of the problem
Whatever the situation is in Africa, African regulators also want to take advantage of spikes and interest of cryptocurrency. Owing to having no legalization, Nigerians engaged with black market to bypass the mass devaluation of the fiat currency shifting wealth into Bitcoin. In that region, another factor is using Bitcoin is an anti-censorship tool.
During the recent coalition in Nigeria, some protestor groups turned themselves to cryptocurrency raising more than $156,000 in Bitcoin. To avoid payment blocking and censorship and third-party intervention, the protestors standing against Chinese influence adopted cryptocurrency in 2020.
Cryptocurrency is coming into action in Africa because it has potentiality for cheap remittances and the instability of fiat currencies. Based on several report, briefly we can say Africa has the smallest cryptocurrency economy.
Who will regulate?
Nigeria, South Africa, and Egypt are the richest countries in Africa, so the responsibility highly lies on the shoulder of any of these three. We can see South Africa made a bit step up because legislators have just considered new rules for a country in line with FATF standards. Another thing to mention is that young Kenyan entrepreneurs created a new payments stablecoin in the sandbox, which was admitted by Kenya’s Capital Markets Authority, last month. So, these all suggest that Africa is slowly heading toward cryptocurrency even though the second-largest content won’t ignore cryptocurrency forever.