SEC DG: Regulatory uncertainty, fraud threaten Nigeria’s $400m crypto market

Emomotimi Agama, director-general of the Securities and Exchange Commission (SEC), says Nigeria’s cryptocurrency market is worth over $400 million.

Agama spoke on Thursday at the 2024 annual conference of the Association of Capital Market Academics of Nigeria (ACMAN) in Abuja.

The event was themed, ‘Crypto Assets and the Nigerian Economy: Implications for Financial Markets Regulation’.

The SEC DG said there is a significant portion of the population involved in cryptocurrency trading and transactions.

He said the volume of the cryptocurrency market in Nigeria would hit $52.5 million in 2028, indicating a 12.66 percent increase between 2024 and 2028.

“Reports indicate that Nigeria’s crypto transaction volume reached $56.7 billion between July 2022 and June 2023, representing a nine percent year-over-year growth,” he said.

“The country’s crypto market is estimated to be worth over $400 million, with a significant portion of the population involved in crypto-currency trading and transactions.”

According to Agama, despite economic challenges, the country has emerged as one of the leading countries globally in terms of crypto adoption and volume of transactions.

He said approximately 33.4 percent of Nigerians own or use cryptocurrencies.

The director-general said the country can take advantage of the large number to further provide financial services for the over 38 million unbanked adults. 

He also said some people do not have bank accounts but they have wallets.

Agama added that cryptocurrencies can also provide cheaper and more efficient methods of remittance for Nigerians in the diaspora.

“Crypto-currencies can significantly reduce remittance costs, with Bitcoin transactions cutting fees by up to 50 percent. Nigeria is one of the largest recipients of remittances in Africa,” the SEC boss said.

“Crypto-currencies offer a more efficient and cost-effective way for Nigerians abroad to send money home. 

“With traditional remittance fees often being prohibitively high, crypto-currencies provide a cheaper and faster alternative.”

‘REGULATORY UNCERTAINTY, CYBERSECURITY THREAT POSE SIGNIFICANT RISKS’

Agama, however, pointed out persisting challenges such as illicit activities as highlighted by the Economic and Financial Crimes Commission (EFCC), which has reported cases of crypto-related scams.

According to the SEC DG, regulatory uncertainty, security concerns and financial literacy pose a serious threat to crypto use.

“The lack of a comprehensive regulatory framework has created uncertainty, which can deter both investors and innovators,” he added.

“Cybersecurity threats, including hacking and fraud, pose significant risks. A substantial portion of the population lacks adequate financial literacy, making them vulnerable to scams and risky investments.”

Nonetheless, Agama said there are numerous advantages in the crypto space.

He said crypto assets present significant opportunities and challenges for Nigeria’s economy, noting that a balanced regulatory approach is essential to harness their benefits while mitigating risks.

“Collaborative efforts from regulators, industry stakeholders, and the public are crucial for developing effective regulations. I encourage continued dialogue and cooperation to ensure a secure and innovative financial ecosystem,” he said.

In his remarks, Mairiga Katuka, chairman of SEC, said the introduction of crypto presents an advantage for the market, urging all stakeholders to chart a course forward for Nigeria with its vibrant financial markets.