Nigeria has emerged as Africa’s leader in cryptocurrency adoption but struggles with a reputation for scams as many fraudsters, disguised as influencers and investment experts, have exploited unsuspecting citizens. Earlier this year, some Nigerian celebrities launched questionable cryptocurrency projects, often called “shitcoins,” that ended up defrauding investors of their hard-earned money.
In order to tackle these issues, the Nigerian cryptocurrency community has expressed strong support for a new law proposed by the Nigerian Securities and Exchange Commission (SEC), the Investment and Securities Bill (ISB) 2024, which aims to crack down on Ponzi schemes and other illicit activities within the country’s financial space.
Key Details of the Proposed Law
Punishment for Ponzi Scheme Operators: The bill proposes a 10-year jail term for anyone convicted of running Ponzi schemes.
Fines: Offenders could also face fines of up to ₦20 million (about $12,000).
The SEC first introduced this bill under former President Muhammadu Buhari, aiming to strengthen Nigeria’s securities market and improve its global competitiveness, however, as the crypto space in Nigeria has been marred by bad actors, this initiative was extended to the crypto space and many stakeholders believe this bill is a game-changer.
Nathaniel Luiz, CEO of Flincap and a longtime crypto advocate, said:
“It’s one way to clear out bad actors from the industry so we can have a vibrant finance and investment ecosystem.”
Web3 analyst and crypto advocate Rume Ophi also praised the bill, noting its potential to serve as a warning to criminals, saying:
“The bill will serve as a deterrent and will make criminals think twice before embarking on Ponzi schemes and crypto investment scams.”
Furthermore, Rume explained that the bill could help restore the reputation of cryptocurrency in Nigeria, changing its perception from a scam-filled space to a legitimate investment opportunity:
“This bill can hold accountable users who have defrauded citizens in the past. It will also help repair the image of cryptocurrency in the country from a perceived scam to a viable investment vehicle.”
Other Benefits of the Bill include:
1. Boosting Investor Confidence as potential investors will feel safer knowing there are laws to protect them.
2. Promote Transparency as the financial market will become more open and trustworthy.
3. Modernize the Market making Nigeria’s financial system more competitive globally.
Challenges Ahead
Despite its benefits, portions of the bill have faced pushback from the Central Bank of Nigeria (CBN) and the Ministry of Finance, however, Senator Osita Izunaso, Chairman of the Senate Committee on Capital Markets, remains optimistic. He said:
“This bill could enhance Nigeria’s capital competitiveness if passed.”
To conclude, as the proposed bill moves through the legislative process, many in the Nigerian crypto community are hopeful it will help transform the industry, by eliminating scams and creating a safer environment for investors, the bill has the potential to pave the way for a brighter future in Nigeria’s crypto and financial sectors.
Nigeria can clean up its crypto space, bolster its reputation, and set an example for other countries in Africa, with laws like this.
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