As the use of cryptocurrencies has grown globally due to inflation and pandemic-related financial challenges, more countries have attempted to leverage the benefits of crypto assets and of the blockchain. However, few countries like the United States and Canada have developed appropriate regulatory guidelines.
At the same time, the regulation of cryptocurrencies is quite complicated, given their decentralized nature.
Countries must consider various legal and procedural proofs of asset security, which is still unclear to many governments because cryptocurrency is volatile. The safety of investors depends, in many cases, on their precautions. For example, those learning to buy cryptocurrencies must ensure the security of their own wallet by implementing cybersecurity measures and being able to secure their own private key.
This is why governments have raised awareness about the sector, its advantages and disadvantages. For example, El Salvador, the only country where Bitcoin is legal tender, offered free courses to citizens and students.
However, proper crypto policy is also essential, and countries like Nigeria have taken up this.
in their own hands and are now toughening conditions for investors.
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Nigeria Leads Africa in Crypto Regulatory Frameworks
Despite initially banning cryptocurrencies, the country is now becoming more engaged in the sector and seeing potential financial opportunities. However, its approach is a bit stricter than other countries, as its Securities and Exchange Commission has previewed a ruling allowing them to take legal action against companies and even individuals carrying out unregulated transactions with crypto assets.
Therefore, companies should seek regulation before offering their crypto services to customers. Otherwise, they may have difficulty continuing their activities in the country. Only two exchanges in Nigeria are regulated by the SEC, including Busha Digital and Quidax Technologies, as they have provisional operating licenses. The institution follows anti-money laundering and anti-terrorism financing protocols when controlling companies.
However, crypto users notice government unpredictability
The government’s act of regulating crypto is commendable as it will ensure the safety of users while allowing them to freely invest and trade in crypto. Yet many have observed a lack of consistency in regulations and reporting, which could pose new challenges to citizens instead of helping them.
Indeed, Nigeria opposed cryptocurrencies in 2021. It banned it for about a year, after which it developed a regulatory framework for cryptocurrencies. Two years later, after the ban was lifted, authorities were still restricting P2P crypto exchanges. Soon, Binance would announce its exit from the country and cease its operations with the Nigerian naira.
Now, regulators want to harness the power of cryptocurrency, but only after enforcing strict regulations. However, their operations lack specific information on the regulatory process, taxation aspects, etc., which poses a challenge for crypto users.
Still, crypto market size is growing in Nigeria
Despite the challenges faced by crypto investors in Nigeria, the market size is growing year on year, making the country one of the leading mitigators in the industry, along with South Africa. According to Statista data, the number of crypto users in Africa will reach 53.89 million by 2025, further advancing market innovation.
At the same time, the growing global demand for cryptocurrencies has prompted the government to lift restrictions and start issuing crypto platform licenses since August this year. The plan aims to strengthen monitoring of digital asset trading for platforms and exchanges and improve the ecosystem.
How can education spark more interest in crypto?
While crypto users are eager to create a safety net with digital assets as countries’ inflation worsens, the lack of education and awareness around crypto usage is a huge setback for crypto users. two parts. The government is reluctant to regulate it because there is little talent in the sector capable of shedding light on the subject, while investors are too enthusiastic to reap the benefits too quickly.
Many countries are constantly working to educate the population about cryptocurrency so that everyone who uses it has a brief idea of its pros and cons. El Salvador was the first country to make Bitcoin legal tender and created a special educational program that would provide people with certification useful for finding a job or simply becoming properly acquainted with crypto.
Other countries are changing the school curriculum and introducing students to the concepts of decentralization, blockchain and cryptocurrency as teachers receive adequate training. According to these plans, governments should be able to provide new jobs and opportunities to those who want to contribute to the adoption of Web3, which will include these technologies.
But how safe is decentralization?
The problem with decentralization is that it would take some time for it to apply to our world, where there is a technological lag in adoption in different regions. This could therefore create an even deeper divide between cultures.
On the other hand, decentralization offers many benefits to businesses and users, including:
- Autonomy over personal information and transactions without resorting to intermediaries;
- Effective features for communities that cannot access financial services;
- Increased transparency and data on the blockchain is visible to all participants;
- Censorship-resistant architecture and infrastructure;
However, we were only able to achieve these benefits with the help of developers and employees specializing in blockchain and decentralization. The industry is currently expanding, so depending on the problem, there is a lot of knowledge and skills to master.
The regulatory challenge is one of the most considerable because, without approval from governments and authorities, it could be more difficult for communities to use these technologies. So we can only wait and see how this develops in the future.
What do you think of Nigeria’s decision to regulate crypto?
Nigeria has finally decided to regulate crypto companies that offer services to citizens to protect them. The announcement comes shortly after cryptocurrencies were banned in the country and re-regulated, causing confusion among businesses and investors.
Nonetheless, the regulatory movement is a step ahead of crypto adoption, given that Nigeria is one of the leading countries in terms of crypto users, thereby increasing the market value.
