May 2, 2023

Nigeria To Allow Digital Exchanges To List Only Tokens, Not Crypto

NIgerian Tokens

NIgerian Tokens

As it becomes more curious about the crypto world and digital assets, Nigeria is considering allowing crypto exchanges to operate in the country but only for tokens.

The Nigerian Securities and Exchange Commission (SEC) plans to allow digital exchanges to operate in the country backed by listing tokens backed by certain assets, according to Cointelegraph.

Head of Investment and Securities at SEC Abdulkadir Abbas said the authority eyes open the door for the tokens based on assets like equity, debt, or property, but cryptocurrencies like Bitcoin or Ether will not be authorized until the Nigerian central bank gives clear regulations for the crypto market.

Abbas pointed out that the applicants who are seeking for getting licenses will go for a one year-regulatory incubation, in which the commission will study their applications and check how they would offer their services in the country.

“By the 10th month, we should be able to make a determination whether to register the firm, extend the incubation period or even ask the firm to stop operation,” Abbas noted.

Earlier in May 2022, the SEC issued preliminary rules on issuing, offering and holding digital assets.

It is worth mentioning that Nigeria came in 11th place on Chainalysis 2022 Global Crypto Adoption Index and 17th in trading volume on peer-to-peer (P2P) exchanges.

Moreover, the value of transactions of eNaira, the Nigerian central bank digital currency (CBDC), has spiked 63% to record $44 million (22 billion nairas), Cointelegraph quoted a Bloomberg report as saying.

This increasing adoption of CBDC in Nigeria comes due to a shortage in fiat currency because the Nigerian central decided to replace older bank notes with bigger denominations because of rising inflation, therefore the lack of the banknotes forced the Nigerians to head for eNaira.

According to Godwin Emefiele, the Central Bank of Nigeria’s governor, nearly 13 million CBDC e-wallets have been opened an increase of 12 times compared to October in a country whose 90% of its transactions are being made through cash accounts.

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