Nigerian stakeholders are urging the Nigerian Securities and Exchange Commission (SEC) to classify bitcoin and ether as commodities, following a recent court decision in Illinois that did the same. Lucky Uwakwe, chairman of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), emphasized the need for clear guidelines to help developers ensure compliance. He believes that defining the asset class of crypto assets is crucial for regulatory clarity. This push for classification aims to establish a comprehensive regulatory framework for digital assets in Nigeria, a country where crypto regulation remains ambiguous despite recent changes in leadership.

The Need for Clear Guidelines

According to Uwakwe, it is crucial for the Nigerian SEC to establish rules that define the asset class of crypto assets. He states that the regulators should categorize various types of crypto and explain how each qualifies as a security or commodity. The chairman pointed out that while the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have agreed on classifying Bitcoin and Ether as commodities, the distinction between proof-of-stake (PoS) and proof-of-work (PoW) protocols could influence the classification of specific crypto assets.

This recommendation from stakeholders is important for Nigeria to establish a comprehensive regulatory framework for digital assets. Notably, despite completing one year in presidency change, the crypto regulation in the country seems hazy. The Commodity Board in the country has historically focused on physical commodities like cash crops and agricultural products. They have shown a limited interest in digital commodities and therefore, this shift in perspective is seen as necessary to keep up with the evolving economy.

BTC and ETH Are Different: Nigerian Analysts

Oladotun Wilfred Akangbe, chief marketing officer at Flincap, an African platform for over-the-counter crypto exchanges, highlighted the varied interest from multiple Nigerian governmental bodies. This includes the Central Bank of Nigeria (CBN), SEC, Federal Inland Revenue Service (FIRS), and National Security Agency (NSA). Akangbe suggests that Bitcoin and Ether need different regulatory approaches compared to other cryptocurrencies. He states: “Foundational cryptocurrencies such as Bitcoin and Ethereum have become very valuable commodities such that assets are priced in them.”

Akangbe proposed that the SEC should focus on cryptocurrencies used as fundraising instruments, such as initial coin offerings (ICOs). Popular Nigerian analyst Rume Ophi also believes in the individual scrutiny of each cryptocurrency to determine whether it qualifies as a security or a commodity. He states that each crypto asset is unique and should be analyzed on its own merits.

The Importance of Regulatory Clarity

The call for clear guidelines and classification is not just about regulatory compliance; it is also about fostering innovation and growth in the Nigerian crypto space. Clear regulations can provide a safer environment for investors and developers, encouraging more participation in the market. This, in turn, can lead to increased economic activity and technological advancement in Nigeria.

The ambiguity in current regulations has been a significant barrier for many crypto startups in Nigeria. Without clear guidelines, these startups face challenges in securing funding, attracting talent, and scaling their operations. By providing a clear regulatory framework, the Nigerian SEC can help remove these barriers and create a more conducive environment for innovation.

The Global Perspective

The push for classifying Bitcoin and Ether as commodities is not unique to Nigeria. Globally, regulators are grappling with how to classify and regulate cryptocurrencies. In the United States, the SEC and CFTC have taken steps to provide clarity, but there is still much work to be done. Other countries, such as Japan and Switzerland, have also made strides in creating clear regulatory frameworks for digital assets.

By aligning with global best practices, Nigeria can position itself as a leader in the African crypto space. This can attract international investment and partnerships, further boosting the country’s economy. Moreover, clear regulations can help protect Nigerian investors from fraud and other risks associated with the crypto market.

The Role of Education and Awareness

In addition to regulatory clarity, education and awareness are crucial for the growth of the crypto industry in Nigeria. Many Nigerians are still unfamiliar with how cryptocurrencies work and the potential benefits they offer. By investing in education and awareness campaigns, the government and industry stakeholders can help demystify cryptocurrencies and encourage more people to participate in the market.

Educational initiatives can also help address some of the misconceptions and fears surrounding cryptocurrencies. For example, many people associate cryptocurrencies with illegal activities and scams. By providing accurate information and highlighting the legitimate uses of cryptocurrencies, stakeholders can help build trust and confidence in the market.

The Future of Crypto in Nigeria

The future of crypto in Nigeria looks promising, but it will depend on the actions taken by regulators and industry stakeholders. By providing clear guidelines and fostering a supportive environment, Nigeria can become a hub for crypto innovation and investment. This can lead to significant economic benefits, including job creation, increased investment, and technological advancement.

However, achieving this vision will require collaboration and commitment from all stakeholders. Regulators, industry leaders, and the broader community must work together to create a regulatory framework that balances innovation with investor protection. By doing so, Nigeria can unlock the full potential of the crypto market and position itself as a leader in the global digital economy.

Summary

Nigerian stakeholders are advocating for the classification of Bitcoin and Ether as commodities to provide regulatory clarity and foster innovation in the crypto space. By establishing clear guidelines, the Nigerian SEC can create a safer and more conducive environment for investors and developers. This can lead to increased economic activity and technological advancement in Nigeria.

The push for classification is part of a broader global trend, with regulators worldwide grappling with how to classify and regulate cryptocurrencies. By aligning with global best practices, Nigeria can position itself as a leader in the African crypto space and attract international investment.

Education and awareness are also crucial for the growth of the crypto industry in Nigeria. By investing in educational initiatives, stakeholders can help demystify cryptocurrencies and encourage more people to participate in the market.

The future of crypto in Nigeria looks promising, but it will depend on the actions taken by regulators and industry stakeholders. By working together to create a supportive regulatory framework, Nigeria can unlock the full potential of the crypto market and position itself as a leader in the global digital economy.

The author does not own or have any interest in the securities discussed in the article.