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Tuesday, March 28, 2023

Nigerian Regulators Behind the Curve as Bitcoin Hits Another Record  

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The Nigerian capital market regulator the Securities and Exchange Commission (SEC) last month suspended plans to regulate cryptocurrencies in the country as the Central Bank of Nigeria (CBN) issued a notice to banks to stop facilitating trading of the largest token Bitcoin (BTC).

Meanwhile Bitcoin has continued to rally, throwing up a risk that the Nigerian regulators are going to end up far behind the digital currency regulatory curve and in the process impede progress for its early adopters in the country who are mostly young people.

Bitcoin continued its momentum once again last week, topping $60,000 for the first time amid optimism that the largest digital token will achieve wider adoption.

The cryptocurrency was at $60,012 as of 12:22 p.m. London time, bouncing back from a rout at the end of February following a previous peak set that month.

It’s benefiting from optimism in financial markets after President Joe Biden signed the $1.9 trillion pandemic-relief bill into law.

“Bitcoin’s resilience is proving to be the stuff of legend,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, a crypto lender.

“Every correction is an opportunity to reset and restart the move upwards.”

Bitcoin is up about 1,000 percent in the past year amid signs of increasing institutional interest as well as speculative demand.

Advocates champion the cryptocurrency as a store of value akin to gold that can act as a hedge against inflation and a weaker dollar.

For regulators in emerging markets like Nigeria, the question to ask is how to provide a framework around regulation that does not harm innovation.

Longer term, the CBN should even begin to think about holding some Bitcoin reserves as a form of Digital Gold.

FinTechs that have been in the forefront of facilitating Bitcoin trading in the country should be freed from the shackles of fearful regulators.

Finally, Nigerian youths that have taken up Bitcoin enthusiastically should be permitted to allocate their assets away from the financial repression currently eating up return on investments in the country.

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