- Nigeria could soon legalize the use of bitcoin
- More and more people from the country switched to cryptocurrencies as their economy faltered
According to a Dec. 18 article from a Nigerian newspaper, the country could soon pass a law that would make Bitcoin [BTC] and other cryptocurrencies legal. This was announced by Babangida Ibrahim, Chair of the House Capital Markets and Institutions Committee.
This measure would recognize Bitcoin as acceptable investment capital and amend the Investment and Securities Act 2007. Nigeria essentially banned the use of bitcoin in February 2021 by issuing a letter banning authorized financial institutions from “trading” cryptocurrencies.
In the same year, data from Chainanalysis and Bitcoin Magazine showed that Nigeria had significantly accelerated Bitcoin adoption. In addition, it had achieved the highest amount of peer-to-peer trading anywhere in the world.
Nigeria thinks about bitcoin regulations
Ibrahim reportedly stated:
“As I said during the second reading, we need an efficient and prosperous capital market in Nigeria. Nigeria lags behind in regulating business. To do this, we have to comply with the latest international standards.”
The new law could be a big driver for the most populous country on the African continent if it effectively addresses the growing use of Bitcoin there.
Blockchain analysis company ChainalysisApproved its 2021 Global Crypto Adoption Index in October 2021, with Nigeria ranking sixth. Inflation, devaluation of the naira, and lack of access to traditional money were some factors that influenced the use of cryptocurrencies.
According to a survey by cryptocurrency exchange KuCoin, more than a third of Nigerians between the ages of 18 and 60 are investing in cryptocurrencies, according to April data.
This was despite the country’s central bank banning commercial banks from engaging in cryptocurrency trading in February 2021. The Nigerian Central Bank claimed this was “a direct breach of applicable law”. It warned that investing in cryptocurrencies poses dangers such as losing money on investments, money laundering and terrorist financing.
By using fiat money to buy bitcoin on peer-to-peer exchanges, more than two-thirds of the 360 Nigerian cryptocurrency investors surveyed by KuCoin did so. According to Chainanalysis, many users rely on P2P platforms not only as an entry point into cryptocurrencies, but also to move funds overseas and conduct business.
So why this demand for crypto?
Macroeconomic issues and a lack of financial inclusion also encouraged Nigerians to trade cryptocurrencies. According to BPC, a financial technology company, 57% of Africans have neither a regular bank account nor a mobile money account.
Meanwhile, annual inflation was 16.5% in April, and the Nigerian naira has depreciated 60% against the dollar since October 2014.
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