In light of a recent court ruling in Illinois that classified Bitcoin and Ether as commodities, Nigerian stakeholders are urging the Nigerian Securities and Exchange Commission (SEC) to adopt a similar approach in its regulatory framework. The call for clarity and proper classification comes as cryptocurrencies play an increasingly significant role in the global financial landscape. Lucky Uwakwe, chairman of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN).
Clear Guidelines Needed
According to Uwakwe, this approach would provide creators with clear guidelines on where to seek regulation.
“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,” he said.
Uwakwe pointed out that while the US SEC and the Commodity Futures Trading Commission (CFTC) agree that Bitcoin and Ether are commodities, the distinction between proof-of-stake (PoS) and proof-of-work (PoW) protocols could alter the classification of specific crypto assets. However, in Nigeria, the Commodity Board has traditionally focused on physical commodities like cash crops and agricultural products, showing little public interest in digital commodities to date.
Advocacy for Individual Scrutiny of Cryptocurrencies
Oladotun Wilfred Akangbe, chief marketing officer at Flincap, a platform for African over-the-counter crypto exchanges, highlighted the multifaceted nature of cryptocurrency and the varied interest from multiple Nigerian governmental bodies.
“Foundational cryptocurrencies such as Bitcoin and Ethereum have become very valuable commodities such that assets are priced in them,” Akangbe noted. He stressed the need for distinct regulatory approaches for Bitcoin and Ethereum compared to other cryptocurrencies.
Akangbe suggested that the SEC should primarily focus on using cryptocurrencies as fundraising instruments, such as initial coin offerings (ICOs). Another local crypto analyst, Rume Ophi, argued that each cryptocurrency is unique and should be scrutinized individually to determine whether it qualifies as a security or a commodity.
Establishing a Comprehensive Framework
The stakeholders’ recommendations are crucial as Nigeria seeks to establish a comprehensive regulatory framework for digital assets. By considering Bitcoin and Ether as commodities, the Nigerian SEC can provide much-needed clarity and stability in the market, encouraging innovation while ensuring regulatory compliance.
