Crypto Crackdown Ends: Nigeria's New Policy Unlocks Web3 Innovation

Barely a month ago, the Central Bank of Nigeria (CBN) issued a circular that ended a two-year crackdown on cryptocurrency within the country’s banking sector, raising the hopes and aspirations of its vibrant crypto community.

For two years, the repressive CBN ban on cryptocurrencies and digital assets shut the doors in the face of potential investors and robbed the West African country of millions of dollars in web3 funding.

While the CBN ban lasted, the rest of the world, however, acknowledged how Nigeria still maintained its position in the crypto race, setting a record as one of the world’s biggest destinations for crypto investments, especially as the biggest crypto market in Africa.

In 2023, Binance ranked Nigeria as the 7th country with the highest number of crypto holders in the world boasting a large trading database. In other words, a little over 22 million people own cryptocurrencies in the country.

The effects of the prolonged ban sapped the enthusiasm of crypto investors who were eyeing the Nigeria booming market, and it was in the heat of the moment that some of its homegrown crypto companies like Patricia left the country, while other less known companies went out of business altogether.

Now that the ominous ban on cryptocurrency has been lifted by the Central Bank of Nigeria(CBN), how is Nigeria making headway in turning its losses to gains and repositioning itself for the next crypto bull run?

A New Era Beckons

The new CBN circular that ended the two-year ban reversed the prohibition that was placed on the country’s Money Deposit Banks(DMBs). Prior to the ban in 2021, local DMBs were directly involved in the crypto services by serving as the payment gateway for crypto traders on various exchanges.

The latest CBN circular, however, now allows them to deal directly with Virtual Assets Service Providers (VASP) in a manner that is consistent with due diligence and crypto compliance.

As a result of this, web3 companies like Agile Dynamics, Blockstation, and FireBlocks have entered the Nigerian market, with a considerable interest and investment in the tokenization of Real World Assets(RWA) in the country.

Tokenization of Real World Asset(RWA): Nigeria’s Biggest Web3 Opportunity

Dubai-based web3 consulting company Agile Dynamics Tech recently announced the signing of Letter of Intent (LOIs) and partnership agreements with Nigeria and two other African countries, signaling its interest in entering the country’s emerging crypto market.

"These agreements represent a significant step forward in our mission to foster meaningful change through technology and strategic partnerships," said Paul Lalovich, cofounder of Agile Dynamics tech.

"We are thrilled to collaborate with Nigeria, South Sudan, and Mali in leveraging digital solutions to drive economic development and strengthen their positions in the global market."

“The signed LOIs and partnership agreements exemplify Agile Dynamics tech's commitment to promoting technological innovation and progress in the mining and minerals sector across diverse international landscapes.

By facilitating the tokenization of Real World Assets and securing Direct Foreign Investments, the company aims to catalyze sustainable growth and prosperity in these regions”.

Nigeria’s SEC Says YES to Innovation

Since the CBN ban was lifted in December 2023, Nigeria’s crypto community has come to terms with the fact that cryptocurrencies are no longer banned in the country, and the government is willing to use this medium to usher in technological innovation and economic growth.

In a groundbreaking move, Nigeria's Securities And Exchange Commission (SEC Nigeria) authorized the National Association of Securities Dealers(NASD plc) to launch the Digital Securities Platform (N-DSP), an electronic platform where cryptocurrencies and other digital assets can be listed and offered to the investing public.

When it is launched, the Digital Securities Platform (N-DSP) is going to be the first Over-The-Counter Service (OTC) for cryptocurrencies and digital assets in the country and the first crypto-based digital platform to be regulated by the Securities And Exchange Commission (SEC)in a compliant fashion.

Eguarekhide Longe, the Managing Director of the NSDP, in his words, stated that :

“Our objective is to empower millions of young crypto investors with access to promising digital assets, ensuring they can confidently purchase in a completely compliant and secure investment environment”.

Furthermore, the innovative spirit of Nigeria’s NASD can be seen in its partnership with Blockstation, a leading blockchain development company. This partnership underscores the vision to make Nigeria a leading web3 hub in the world.

It also goes to show that blockchain technology can play a vital role in boosting the country’s GDP.

Commenting on the recent SEC approval, Blockstation founder and CEO Jai Waterman stated that:

“The integration of cutting-edge technology to address the needs of, and captivate the substantially large youthful population, is set to unlock previously untapped markets. We are confident that this platform will play a pivotal role in propelling Nigeria into a new era of economic growth”.

Conclusion

The 2021 CBN ban on crypto transactions was reversed on the 22nd of December, 2023, through a circular allowing Virtual Assets Service Providers(VASP)to operate in the country. The ban, which lasted for two years, created a roadblock to potential crypto investments and lowered the bar of web3 innovation.

However, the new policy is touted to be a game-changer as Nigeria continues to attract foreign investment and as it continues to show its commitment to web3 innovation.