SHOULD CRYPOCURRENCIES BE REGULATED OR BANNED? -  AN ANALYSIS OF THE REGULATORY STANCE ON CRYPTOCURRENCIES IN NIGERIA

The surge in conversations surrounding cryptocurrencies recently is not completely surprising as this class of assets which were of little to no value in 2009 when the world’s first cryptocurrency “Bitcoin” was created, are now estimated to be worth approximately $36,000 per crypto-unit. With the rapidly growing popularity of cryptocurrencies as a trading instrument across the world, a major point of interest and concern for most people in relation to cryptocurrencies is the mode of regulating them, especially in consideration of their unconventional nature. This article will provide an insight into the current regulatory stance on cryptocurrencies in Nigeria.

Cryptocurrencies are decentralized digital currencies which can be used in purchasing goods and services and can also be traded for profit making purposes. Being decentralized means that cryptocurrencies are not subject to supervision/management by a central bank, as with traditional currencies. Rather, cryptocurrency transactions are carried out through blockchain technology. Blockchain technology is a decentralized processing and recording platform which is shared and can be accessed by different computers simultaneously for the purpose of cryptocurrency related transactions.  Furthermore, blockchain technology is mainly characterized as being a highly secure and transparent network which locks out any form of interference by third parties in the chain of events or transactions.

The decentralized nature of the cryptocurrency system is arguably its focal feature and has also been posited to be one of its major advantages. On the other hand, its decentralized nature has also been asserted as the reason why the regulation of cryptocurrencies may prove difficult. Nonetheless, the Securities and Exchange Commission’s (“SEC”) initial stance on cryptocurrency is worth considering. SEC communicated its foremost position on cryptocurrencies to the Nigerian public through a public notice dated 12 January 2017.