TL;DR,

• The Nigerian Senate committee urged immediate crypto regulation establishment, warning that unclear policies are crushing the Naira.
• The Senate proposes a unified framework to align the CBN and SEC, promote local crypto exchanges, and adopt blockchain tech.
• New SEC director-general Emomotimi Agama pledged to transform Nigeria’s capital market following Senate warnings that regulatory confusion drives citizens underground.

The Nigerian Senate has called for the establishment of a proper crypto policy and warned that the country’s unclear position could be costing the government. The committee also urged Bola Tinubu’s administration to develop the capital and crypto markets framework before the Naira’s stability sinks further.

Nigerian Senate Pushes for Crypto Regulation to Rescue the Naira

The Nigerian Senate has underscored the need for a comprehensive crypto policy to protect investors engaged in digital asset trading. Committee chairman Osita Izunaso argues that regulation is the only logical step since authorities have failed to stop residents from trading crypto assets.

According to a local report, Izunaso made these remarks shortly after Emomotimi Agama, the recently appointed Nigerian Securities and Exchange Commission director-general, appeared before the committee.

As per the report, Izunaso urged for an actionable agenda for its regional crypto market development. Newly appointed SEC director-general, Emomotimi Agama, would have to step up and capitalize on Nigeria’s growing crypto market.

The committee chairman warned that the unclear stance of regulators on crypto would adversely affect the Naira. More Nigerian have sought its yield-generating features and obvious value over the Naira, causing an entire generation to only view the local fiat as a means for daily purchases and nothing more.

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Despite having one of the largest crypto markets globally, Nigeria still needs to maintain a coherent position on crypto assets. This inconsistency was evident in the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) stances.

While the SEC has consistently signalled its willingness to regulate crypto assets, the CBN took measures to suppress the growth of crypto trading. This was in fear that Bitcoin’s value appeal to locals threatened the Naira’s stability.

The Naira’s Decline and the Search for a Scapegoat

The departure of former Central Bank of Nigeria (CBN) governor, Godwin Emefiele, led to a gradual shift in the central bank’s stance on cryptocurrencies. This shift culminated in the rescinding of the CBN’s February 5 directive.

However, when the local currency rapidly depreciated against the U.S. dollar earlier this year, Nigerian authorities targeted alleged currency speculators using crypto exchange platforms like Binance.

Since then, regulators have taken measures to restrict crypto trading. These actions include ordering global crypto exchange platforms to delist the local currency. The West African nation has also taken decisive actions against Binance, accusing the platform of facilitating currency manipulation.

While these measures aim to revive the Naira’s stability, digital assets have firmly embedded themselves within the nation. Nigeria leads Africa’s crypto frontier, featuring among the top five countries to adopt digital assets.

The situation wasn’t changing; it was simply going underground to platforms that even regulation couldn’t touch. Ultimately, the Nigerian Senate sought it fit to develop a better crypto policy, crafting it in a way that caters to the local and economic needs the nation requires.

Senate’s Four-Point Blueprint for Nigeria’s Crypto Market Development

Fortunately, the Nigerian Senate proposed several starting points to encourage growth while protecting consumers.

These proposals include creating a designated regulatory framework for Initial Coin Offerings (ICOs) and establishing clear guidelines for crypto exchanges operating within the country. The committee hopes to attract local and international investors to participate in the burgeoning market by defining legal parameters.

Firstly, the committee advocates for establishing a unified regulatory framework that aligns the policies of the Central Bank of Nigeria and the Securities and Exchange Commission. Fragmentation will only foster confusion and unclear guidelines. Having both regulatory powerhouses aligns creates a clear directive that local and foreign investors, exchanges and start-ups can adhere to.

Secondly, the committee recommended the use of advanced technologies in financial markets to enhance transparency and efficiency. Blockchain and AI have taken root globally; catching up provides an edge against its opponents. Additionally, blockchain offers secure, traceable and safe transactions while AI comes in for analysis.

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Education quickly followed, with the committee calling upon public education programs. Cryptocurrency is a rapidly evolving market, and educating the populace on its risks and advantages leads to more informed decision-making. Blockchain developers are also in high demand locally and internationally.

This would funnel into the development of local crypto exchanges and digital financial products. While global platforms like Binance introduced these services, they still only cater to a small portion. Local solutions target the local vendor, whose concern is over broader payment options rather than understanding the dynamics of the market. Fostering such a solution could also provide use cases for the Naira, offering better rails with easier conversion APIs and rates.

Senate’s Urgent Warning on Capital Market Reform

That is what is crushing the Naira and making the Naira so little when it’s competing with other currencies. But if we develop our capital market, and develop our crypto market, we will bring more liquidity into the system. That will help to cushion all the problems we have,” Izunaso stated.

Meanwhile, Agama, seen as pro-innovation, has vowed to turn around the Nigerian capital market and change the narrative. He added that the SEC will introduce innovative programs that will lead to the creation of world-class companies.