Nigeria Considers Regulating Bitcoin and Ether as Commodities

In the wake of a landmark Illinois court decision classifying Bitcoin and Ether as commodities, Nigerian stakeholders are urging the Nigerian Securities and Exchange Commission (SEC) to follow suit. This push for clear regulatory classification comes as cryptocurrencies become increasingly integrated into the global financial system.

Lucky Uwakwe, chairman of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), emphasizes the importance of clear categorization for crypto assets. In a Cointelegraph interview, Uwakwe stressed the need for “rules that define the asset class of crypto assets or break respective crypto into asset classes.” This classification system would provide a roadmap for creators, clearly indicating which regulatory body they should engage with.

Uwakwe acknowledges the precedent set by the US, where the SEC and Commodity Futures Trading Commission (CFTC) agree on Bitcoin and Ether’s classification as commodities. However, he raises the possibility that the distinction between Proof-of-Work (PoW) and Proof-of-Stake (PoS) protocols might influence the classification of specific crypto assets within the Nigerian context.

Challenges and Considerations

Traditionally, Nigeria’s Commodity Board has focused on tangible commodities like agricultural products and cash crops. Digital assets haven’t garnered significant public attention from this regulatory body to date.

Oladotun Wilfred Akangbe, Chief Marketing Officer at Flincap, a platform facilitating African over-the-counter crypto exchanges, highlights the multifaceted nature of cryptocurrencies. He acknowledges the role of foundational cryptocurrencies like Bitcoin and Ethereum in becoming “valuable commodities” used as a pricing benchmark for other assets. Akangbe advocates for differentiated regulatory approaches for established cryptocurrencies like Bitcoin and Ethereum compared to newer or more niche ones.

Akangbe suggests the Nigerian SEC prioritize regulations focused on cryptocurrencies used as fundraising tools, such as Initial Coin Offerings (ICOs). Rume Ophi, another local crypto analyst, emphasizes the unique characteristics of each cryptocurrency, advocating for individual scrutiny to determine whether they qualify as securities or commodities.

The recommendations from these stakeholders hold significant weight as Nigeria embarks on establishing a comprehensive regulatory framework for digital assets. By classifying Bitcoin and Ether as commodities, the Nigerian SEC can provide much-needed clarity and stability for the market. This approach fosters innovation while ensuring compliance with regulations.