In light of a recent court ruling in Illinois that classified Bitcoin and Ether as commodities, Nigerian stakeholders are encouraging the Nigerian Securities and Exchange Commission (SEC) to adopt a similar regulatory approach. This move could help create a framework that acknowledges the distinct characteristics of these digital assets.
The Call for Clear Classification
As cryptocurrencies continue to play a significant role in the global financial landscape, clear regulatory guidelines are becoming increasingly important. Lucky Uwakwe, chairman of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), emphasized the need for precise definitions of crypto assets. Uwakwe stated, “The Nigerian SEC should keep in mind the need to make rules that define the asset class of crypto assets or break respective crypto into asset classes and explain to the public how such crypto qualifies to be called securities or commodities.”
Uwakwe highlighted that while the US SEC and the Commodity Futures Trading Commission (CFTC) agree on classifying Bitcoin and Ether as commodities, the difference between proof-of-stake (PoS) and proof-of-work (PoW) protocols could impact the classification of various crypto assets.
Current Focus of the Commodity Board
In Nigeria, the Commodity Board has traditionally concentrated on physical commodities such as cash crops and agricultural products. There has been limited public interest in digital commodities so far. However, this perspective may need to shift as digital assets become more prevalent.
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Advocacy for Individual Cryptocurrency Scrutiny
Oladotun Wilfred Akangbe, chief marketing officer at Flincap, a platform for African over-the-counter crypto exchanges, pointed out the multifaceted nature of cryptocurrencies and the interest from multiple Nigerian governmental bodies, including the Central Bank of Nigeria (CBN), SEC, Federal Inland Revenue Service (FIRS), and National Security Agency (NSA). Akangbe noted, “Foundational cryptocurrencies such as Bitcoin and Ethereum have become very valuable commodities such that assets are priced in them.” He stressed the necessity for distinct regulatory approaches for Bitcoin and Ethereum compared to other cryptocurrencies.
Akangbe suggested that the SEC should concentrate on cryptocurrencies as fundraising instruments, such as initial coin offerings (ICOs). Additionally, local crypto analyst Rume Ophi argued that each cryptocurrency is unique and should be individually scrutinized to determine whether it qualifies as a security or a commodity.
Importance of Regulatory Framework
The recommendations from these stakeholders are crucial as Nigeria aims to establish a comprehensive regulatory framework for digital assets. By treating Bitcoin and Ether as commodities, the Nigerian SEC can provide much-needed clarity and stability in the market. This approach would encourage innovation while ensuring regulatory compliance, fostering a secure environment for both investors and developers.
