Nigeria is among 15 nations that comprise West Africa’s ECOWAS region
Countries from the ECOWAS region are divided in crypto stance
While Nigeria is crypto-friendly, crypto is banned in Sierra Leone
Statista projects that the crypto market in Western Africa is projected to grow by 12.26 percent by 2028
Photo Credit: Pixabay/ Sergei Tokmakov
European Union's crypto-focussed MiCA legislation, created to govern the crypto sector, went live on June 30 almost one year after being finalised in April 2023. The aim of this legislation is to ensure that investors engaging with the crypto sector across the EU region are safeguarded against the factors of financial risks and instability that volatile crypto assets carry are rather infamous for. The lawmakers of Nigeria and other neighbouring nations are being urged by policy analysts to take inspiration from the EU to develop their own crypto regulations.
What are Nigeria's learnings from EU's MiCA
Nigerian policy-makers are impressed with the MiCA laws because they prioritise the growth of this niche sector while also protecting the interest of investors. Nigerian policy analyst Obinna Uzoije recently said in a CoinTelegraph interview that crypto regulations like MiCA brings more clarity to the dos and don'ts for crypto businesses and investors.
Uzoije has said to have advised the Economic Community of West African States (ECOWAS) to examine the intricacies of MiCA and how the legal framework has systematically and uniformly been deployed across the EU region.
The region of ECOWAS comprises of fifteen nations including Nigeria Ghana, Guinea, and Senegal among others. Out of these fifteen nations, Nigeria and a few others are crypto-friendly whereas some like Sierra Leone are strictly anti-crypto where crypto activities are banned, which has left the other nations in confusion.
Uzoije has reportedly suggested the ECOWAS nations to come to a middle-ground on crypto activities so that they could at least be used to elevate the financial status of these countries. Uniform rules for virtual assets, as per Uzoije, will not only attract businesses looking for crypto-friendly regions towards ECOWAS but also diversify investment options for these countries as well as for their citizens, the report added.
In addition, a concrete legislation around crypto could subsequently curb instances of crypto misuse for criminal activities like money laundering and terror financing stemming within the Western African region. Up until now, the ECOWAS Commission headed by Imar Alieu Touray has not reacted to Uzoije's suggestions.
MiCA explained
The MiCA — or Markets in Crypto Assets – framework was given a greenlight by EU regulations back in October 2022. The rules that are part of this legislation cover preventative and risk mitigation steps linked to crypto-based activities like insider dealing, unlawful disclosure of inside information, and market manipulation.
Under these laws, any Web3 firm looking to operation in the EU will have to first secure a licence from at least one of the EU's 27 national financial regulators. Crypto-related businesses have also been mandated to publish white papers of the products and services they are offering along with clear risk warnings and financial consequences.
Earlier in June, the European Banking Authority (EBA) finalised the technical standards that Web3 firms need to meet before they can operate in the EU under the MiCA regulation. The EBA addressed a number of issues in its final draft of technical standards for MiCA, including those related to liquidity requirements, stress testing programme, asset reserves, and recovery plans. The law also strengthens oversight on asset-referenced tokens (ARTs) -- which includes stablecoins while also increasing the monitoring of e-money tokens (EMTs) like CBDCs.
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