BAF Summit 2022: Cryptoasset Policymaking and the Future of Global Economy: What went well, what didn’t go well, and what can we do better in Nigeria?

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The CBN needs to reconsider its current anti-crypto directive in the country’s banking and financial system to properly prepare the Nigerian banking and financial sector for the increasingly decentralized future of finance. Focus should shift from outright prohibitions, fines, and bans in Nigeria’s banking and financial system to efficient and effective transaction monitoring and reporting system. This is what an AML/CFT framework for cryptoassets provides in line with global best practices.- Senator Ihenyen, SiBAN President

On 17 September 2022, 53 countries convened at Blockchain Associations Forum’s (BAF) 2nd Annual Member Summit to debate cryptoasset policies, national digital asset strategies, and the future of global economy. SiBAN, a founding member of BAF, represented Nigeria. Senator Ihenyen, SiBAN President, chaired the 7th session at the Summit. Senator Ihenyen spoke briefly on the topic: ‘Cryptoasset Policymaking and the future of global economy: What went well, what didn’t go well, and what can we do better?’  Before Senator Ihenyen’s presentation, the President of British Blockchain Association (BBA), Prof. Dr. Naseem Naqvi, acknowledged the incredible work SiBAN has been doing in Nigeria and said he looked forward to what SiBAN has to share with the world at the summit.

Highlight of SiBAN President’s Presentation

Below is the highlight of the President’s submission:

What Went Well

  • Nigeria has a National Blockchain Adoption Strategy, championed by the National Information Technology Development Agency (NITDA) and supported by the Federal Ministry of Communications and the Digital Economy. Nigeria is targeting to realize up to $10 billion from the Blockchain technology by 2030. SiBAN is recognized as a stakeholder in the National Blockchain Adoption Strategy.
  • The Securities and Exchange Commission (SEC) now recognizes cryptoasset players under its new regulations on digital assets in Nigeria. May 2022. According to the regulation, digital asset players include digital asset offering platforms (DAOPs), digital asset custodians (DACs), virtual assets service providers (VASPs), and digital assets exchange (DAX). The regulations apply to the use of cryptoassets or digital assets in the investments and securities market.
  • A National Workstream on Virtual Assets Sector was set up in March 2022 in order to bring Nigeria up to date with AML/CFT compliance for virtual assets. The Nigerian Financial Intelligence Unit (NFIU) recognizes cryptoassets as a financial innovation requiring regulation to ensure accountability and transparency. Consequently, the NFIU is currently promoting the idea of the Travel Rule among virtual asset service providers (VASPs) in Nigeria.
  • Nigeria has enacted a new Money Laundering Act 2022 to, amongst other things, bring virtual assets within its AML/CFT framework in order to be compliant with FATF standards on AML for crypto assets. 
  • In June 2022, SiBAN introduced a Code of Conduct for VASPs in Nigeria. The Code of Conduct applies to both registered members of SiBAN and nonmember who voluntarily adopt the Code.
What didn’t go well?
  • Although Nigeria has a National Blockchain Adoption Strategy, there is an obvious lack of collaboration amongst     stakeholders, particularly amongst regulators, including the Central Bank of Nigeria (CBN), the SEC, and other key regulators. This has impacted negatively on innovation development, policy formulation, and regulation in Nigeria’s emerging cryptoassets industry.
  • Although the SEC now regulates digital assets in Nigeria, the CBN is yet to review its anti-crypto directive in Nigeria’s bankinglsystem. In February 2021, the CBN issued a directive to financial institutions to stop facilitating cryptocurrency transaction. This situation impairs the work of law enforcement agencies concerning investigation and prosecution of crypto-related crimes in the country. The impairment stems from the CBN failure to implement a regulatory framework oncryptocurrencies in Nigeria’s banking system. Placing fines banks that facilitate crypto transactions, knowingly or unknowing, will not boost investor confidence but create avoidable tension and instability in the financial system.

Way Forward; What can we do better?

  • The National Blockchain Adoption Strategy needs reviewing to ensure that all stakeholders identified under the framework, including the CBN, are aligned. This will promote consistency and certainty in cryptoassets policy and regulation, as well as promote innovation support and development.
  • The CBN needs to reconsider its current anti-crypto directive in the country’s banking and financial system to properly prepare the Nigerian banking and financial sector for the increasingly decentralized new world of finance. Focus should shift from outright prohibitions, fines, and bans in Nigeria’s banking and financial system to efficient and effective transaction monitoring and reporting system. This is what an AML/CFT framework for cryptoassets provides in line with global best practices.
  • Regulators and the government needs to improve on multi-stakeholder engagements, including cryptoasset industry engagements. This will ensure proper development of policies and regulations in the cryptoassets sector and also help to encourage compliance and cooperation while boosting trust between operators and regulators.

The BAF Summit is the annual summit of the ‘United Nations of Blockchain”, the largest blockchain associations platform in the world. Hosted by the British Blockchain Association (BBA), BAF’s founding members include SiBAN. SiBAN will collaborate with BAF to introduce and implement proper policies and regulations that promote responsible cryptoassets innovation and adoption, aiming to make Nigeria competitive in the global economy.

The upcoming issue of The JBBA (October 2022) will publish key recommendations for policymakers and the proceedings of the BAF Summit 2022.

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