- Nigeria has officially recognized crypto as securities after the president signed the Investments and Securities Act 2024 (ISA 2024) into law.
- The ACT strictly protects investors, imposing at least 10 years of prison term on people convicted of Ponzi schemes.
Nigeria President Bola Ahmed Tinubu boldly signed the Investments and Securities Act 2024 (ISA 2024) into law, repealing the Investments and Securities Act No. 29 of 2007. This implies that cryptos are now classified as securities and would be under the Nigerian Securities and Exchange Commission (SEC) legal jurisdiction.
While this significant step attempts to curb fraudulent activities, it also strengthens oversight as businesses dealing in digital assets are required to register with the relevant agency.
According to experts, this is a decision in the right direction and a big step ahead of the US, which, as we discussed earlier, is struggling to classify assets under commodities and securities.
Experts Comment on the ISA
Commenting on ISA, the Chairman of the Council Chartered Institute of Stockbrokers (CIS), Oluropo Dada highlighted that this enactment underscores the relentless effort and commitment of the government to improve transparency, efficiency, and stability in the financial market. Additionally, Dada emphasized that this is a bigger step towards modernizing the regulatory framework and improving investor protection.
As capital market professionals, we are confident that this Act will deepen market integrity, boost investor confidence, and expand the range of investment opportunities available to Nigerians and global investors alike.
The recently introduced ACT is also reported to categorize securities exchanges into Composite and Non-composite exchanges clearly. While the former could host all categories of securities, the latter only focuses on the singular type of products.
Meanwhile, the ACT enforces tougher penalties for those who engage in Ponzi schemes. Individuals convicted of this could spend at least 10 years in prison and pay a total monetary fine of up to 40 million Naira ($26,000).
The Director General of SEC, Emomotimi Agama, believes that ISA is a testament to their interest in building a resilient capital market.
We commend all stakeholders within and outside the capital market community for their unwavering solidarity towards the achievement of this historic milestone and solicit their continued collaboration in respect of the effective implementation of the ISA 2024 for the benefit of our economy.
Nigeria has been one of the biggest markets for cryptos, becoming the second largest holder of cryptocurrencies behind the US. To offset the pressure on the local currency, the Central Bank of Nigeria (CBN) earlier instructed banks to close all accounts linked to any form of crypto transactions. This forced traders to resort to peer-to-peer (P2P) exchanges for businesses.
However, President Bola Tinubu eased the stance on crypto after he assumed office in 2023. Even so, it has filed an $81.5 billion lawsuit against Binance as it claims the exchange cost them $79.5 billion in economic losses. As noted in our earlier post, the country also demands $2 billion in back taxes for 2022 and 2023.
In a recent update, CNF also disclosed that Nigeria is reviewing its digital asset regulations to tax crypto transactions via regulated exchanges.
