Whilst
\nat a meeting, in the early hours of 8a.m. yesterday, I read a report
\non Business Day that members of the House of Representatives on
\nWednesday called on Central Bank of Nigeria (CBN) and Nigerian
\nDeposit Insurance Commission (NDIC) to put in place a legal framework
\nfor the regulation of the blockchain technology. Hence, as a
\ntechnology law and policy consultant, I decided to weigh in on the
\nmatter, as a matter of urgent national service and to provide some
\ninformed insights that will lead us into a proactive, rather than
\nreactive decision as Africa\u2019s most populous and strategi\n<\/p>\n
Firstly, The Blockchain Since Thomas In On The In In But Firstly, Secondly, Thirdly, \nNigeria There Should Nigeria regulate block-…<\/p>\n","protected":false},"author":1036,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[315,363,362,302,324,313,367],"tags":[627,676,499],"class_list":["post-39113","post","type-post","status-publish","format-standard","hentry","category-filing-and-paying-taxes","category-leadership","category-legal","category-politics","category-public-sector-government-funding","category-regulatory-requirements","category-research","tag-africa","tag-nigeria","tag-regulatory-requirements"],"yoast_head":"\n
\nit is important to state that
\nthe Nigerian Senate had earlier referred the matter to the Central
\nBank of Nigeria (CBN) and the Nigeria Deposit Insurance Commission
\n(NDIC), who set up a committee to look at the use of bitcoin.<\/strong>
\nHowever, the call by the House of Representatives expanded its scope
\nto \u2018block-chain (and internet technology)\u2019.<\/p>\n
\nblockchain is an undeniably ingenious invention \u2013 the brainchild of
\na person or group of people known by the pseudonym, Satoshi
\nNakamoto<\/i>.
\nBut since then, it has evolved into something greater, and the main
\nquestion every single person is asking is: What is Blockchain?<\/p>\n
\nhas become a user-friendly digital and decentralization (distributed)
\nledger technology that records all transactions without the need for
\na financial intermediary such as a bank as a core payment facilitator
\nfor the financial services industry. Imagine, using a Google
\nDocument, where every edit you do is seen immediately by another,
\nunlike if you typed on a MS Word and sent to another via email for
\nediting. The blockchain technology like Google Document allows for
\nopen visibility and transparency on transactions. By allowing digital
\ninformation to be distributed but not copied, blockchain technology
\ncreated the backbone of a new type of internet. The first of this,
\nBitcoin was originally devised for the digital currency, however,
\nthe tech community is now finding other potential uses for the
\ntechnology. In addition to Bitcoin, there are a number of digital
\ncurrency (\u201cdigital monies\u201d) that use blockchain technology for
\ntransaction, and they include: Litecoin (LTC), Ethereum (ETH), Zcash
\n(ZEC), Dash, Ripple (XRP), Monero (XMR), to mention a few.<\/p>\n
\nits inception there has been successes and rapid developments\u2013
\nalleged hacks and lost currencies, as well as the challenge of
\nwhether it is being used for \u2018illicit\u2019 trades. To increase trust,
\nsome technology solutions have been deployed, which includes, signing
\nthe currency for identification. However, there is a widespread
\ndebate whether there is a need to regulate the technology or not,
\nwhether it is in conflict with the traditional banking system or
\nsupports it, and whether it poses serious risks than opportunities to
\nthe global and national community?<\/p>\n
\nFray in one of his books Communicating
\nwith the Future: How Re-engineering Intentions Will Alter the Master
\nCode of Our Future (2011; p. 30),<\/em>
\nstates that cryptocurrencies will displace about 25% of national
\ncurrencies in the next 12 years. He believes this is because digital
\ncurrencies are more efficient. In line with Fray\u2019s arguments, Malta
\nis positioning itself as a \u2018safe haven\u2019 for cryptocurrency, as it
\nkeeps welcoming companies involved in digital currencies. It appears
\nthe country has plans towards developing the digital currency
\nindustry.\n<\/p>\n
\naddition to Malta, Brazil followed suit by re-emphasizing an
\nunwillingness to \u2018jump\u2019 into regulating cryptocurrencies.
\nSwitzerland, known for its progressive attitudes toward individual
\nrights in banking, has kept a similar attitude, and appears to have
\nan open attitude toward the cryptocurrency industry. Johann
\nSchneider-Ammann, Switzerland\u2019s Economic Minister, told reporters
\non January 18, 2018, that he wants Switzerland to be \u201cthe
\ncrypto-nation\u201d of the world. Bank of England\u2019s chief, Mark
\nCarney, who also chairs the G20’s Financial Stability Board, wrote
\nthis week that “crypto-assets do not pose risks to global
\nfinancial stability at this time,” citing the relative size of
\nthe overall market cap.\n<\/p>\n
\nthe other hand, countries such as China, Russia, United States of
\nAmerica, Venezuela and Kenya are taking an increasingly coercive than
\npersuasive policy stand. China out-rightly outlawed cryptocurrencies,
\nwhilst the US and Japan, rejected the idea that cryptocurrency is \u2018
\na form of currency\u2019, but should be seen as property such as gold
\nand real estate, subject to taxation. In Japan, investors are now
\nobliged to declare their profits in the annual tax returns, as
\nJapan\u2019s tax authorities have begun creating a database of
\ncryptocurrency investors (even e-commerce is closely monitored).<\/p>\n
\nquestions here are: what approach should Nigeria take on the issue of
\nregulating crytocurrency in Nigeria? Would it do more good than harm
\nregulating and how? Can blockchain help improve Nigeria’s funding
\necosystem for businesses, where the traditional banking system has
\nfailed? Can we boast agriculture and food industry with the
\nblockchain? Can blockchain improve Nigeria\u2019s financial inclusion
\ncrisis? How can Nigeria apply the Blockchain to improve governance?\n<\/p>\n
\nanswering these concerns from a global perspective, at the G20
\nFinance Ministers\u2019 meeting held in 2017, which set July 2018 as
\ndeadline for a unified cryptocurrency regulation, Japan’s Finance<\/em>
\nMinister Taro Aso was quoted as saying “I
\ntold my <\/i>G20<\/i><\/em>
\ncounterparts that no country would benefit from [strict]
\ninward-looking policies based <\/i>on<\/i><\/em>
\nprotectionism<\/i>“.
\nIn this sense, there are mild approaches to dealing with the
\nblockchain technology beyond protective and coercive policy
\ninstruments such as regulations and taxation. It is further argued
\nthat money
\n(invented around 5,000 B.C.), came as a
\nclearly identifiable object of value that is generally accepted as
\npayment for goods and services and repayment of debts within a
\nmarket, even before the advent of a Central Bank in 1668 (first
\ncalled the \u201cSwedish Riksbank\u201d). No wonder, Sweden is taking the
\n\u2018bullish\u2019 lead in adopting cryptocurrency for transactions and
\nsocial services.\n<\/p>\n
\nNigeria, whilst recovering from a recession, in January this year,
\n\u2018SureRemit\u2019<\/em>
\na Nigerian non-cash remittance start-up raised $7 million through
\nblockchain with what is known as initial coin offering (ICO) from a
\nglobal community, with help from South Korea\u2019s largest
\ncryptocurrency fund \u2018Hashed\u2019. SureRemit based in Lagos, Nigeria,
\nleverages on the merchant network of SureGifts and her global
\npartners, to enable immigrants send e-vouchers that can be used to
\npurchase goods and services at several quality merchants and pay
\nbills globally. That is a success story by young \u2018Not Lazy
\nNigerians\u2019, which goes to show Nigeria can create an environment
\nthat leverages the blockchain technology to increase alternative
\nfinance and global markets for entrepreneurs, where the traditional
\nfinancial system have failed, as well as create jobs, and increase
\nwealth, whilst minimizing the alleged \u2018threats\u2019.<\/p>\n
\nhow could this be done? Here are a few recommendations for the policy
\nmakers in Nigeria:<\/p>\n
\nseek first to understand blockchain technology from an empathetic
\npoint, than dread it out-rightly. A consultation with the brains
\nbehind \u2018SureRemit\u2019<\/i>,
\nas well as many other technical, academic, and non-technical
\nstakeholder is key \u2013 it is in fact the master key. A
\nmulti-stakeholders approach must be adopted by the CBN\/NDIC committee
\nand Federal parliament, in ensuring that Nigeria provides a
\nstandpoint that benefits from blockchain, whilst minimizing risks
\nproactively, before the next G20 meeting.<\/p>\n
\nregulation is desirable but early regulations must not become an
\ninstrument that aids the throwing of the baby and the bath water into
\nthe canal. However, the Government has to find a way to intelligently
\nregulate crypto-businesses or use existing \u2018copious\u2019 laws, with
\nan intent \u2018only\u2019 to protect the citizens from plausible risks;
\nlargely based on standards of customer care, not necessary to protect
\nan old fiscal order for the sake of protectionism. It is most
\ndesirable for deep-necked regulations to evolve with exhaustive
\nconsultation, than through forcibly adopted means either from a
\nforeign country or through international consensus. Imagine if the
\ninternet had been heavily regulated at its growth yesterday, we might
\nnot necessary have seen innovation flow in the direction it has
\ntoday.\n<\/p>\n
\nnew policy instruments in this regard (not necessarily regulations
\nalone) might be employed instead of amendment to an existing
\nlegislation or a new set of regulations, but should ensure it
\npromotes wealth creation for Nigeria, vis-a-vis achieve reasonable
\nstandards in security, customer service and risk management
\nstandards, as well as other issues around privacy, captive deployment
\nof cryptocurrencies, inward and outward remittances, the definition
\nof \u2018currency\u2019, a clear delimitation of crypto-activities, and
\ndecentralized and decentralized repositories. Usually, the debate at
\nthis level needs be centred on the determination of whether
\ncryptocurrencies should be classified as a currency<\/em>
\nor as a commodity.<\/em>
\nWhere it is decided that cryptocurrencies be classified as currency<\/em>,
\nthe Central Bank of Nigeria, will rightly exercise regulatory
\ncontrol; otherwise, not. There are also tax considerations that arise
\nfrom a classification, either way. For instance, if cryptocurrencies
\nis considered a commodity<\/em>,
\nthis classification may awaken sales tax obligations. Also, a
\nclassification as a commodity will take cryptocurrencies out of the
\nExclusive Legislative List in the Nigerian constitution\u200a—\u200anot
\nbeing legal tender- and provide state governments with the
\nlegislative competence to regulate cryptocurrencies; something I
\nimplore the Lagos state Government to be proactive about.<\/p>\n
\nmust own her decisions, we must ensure and identify key opportunities
\nto prosper Nigerians, without compromising standards or the integrity
\nof our financial markets, with not only legal but also technology
\nsolutions to the issue. This is what South Africa is doing \u2013
\nrelatively progressive on the subject of cryptocurrencies. South
\nAfrican government began in July of 2017 to work with Bankymoon<\/i>,
\na blockchain-based solutions provider, on creating a \u201cbalanced\u201d
\napproach to bitcoin regulation. Nigeria can also partner and invest
\nher political will in training young Nigerians with skills in the
\narea of blockchain technology \u2013 a step the Kaduna state Government
\nis commended for taking.<\/p>\n
\nare many other technical and legal cum policy issues I would have
\nloved to address, but I would round-off on this note. Thank you.<\/p>\n","protected":false},"excerpt":{"rendered":"