Tuesday, Sept 3, 2024

crypto regulation roundup: Nigeria, NFTs, Russia – plus, Thailand and ETFs

“In every tool we create, an idea is embedded that goes beyond the function of the thing itself.”  – Neil Postman ||

Hi all, and welcome to September! For those of you who had a day off yesterday, I hope you had a great Labor Day weekend, and are ready for what will no doubt be an eventful fall.

Where I live, the transition between August and September is usually abrupt, but it seems especially so this year – it’s not just the drop in temperatures (from sweltering to merely very warm), it’s also the sudden crowding of the streets and shops and cafés as bronzed city dwellers return after a few weeks at the beach or in the mountains. A shock to the system of someone who has loved the relative peace and quiet of an emptier Madrid.

In today’s newsletter, I offer the regular crypto regulation roundup, focusing on what’s really behind the big changes in Nigeria, on the SEC’s move against NFTs, and on Russia’s scramble to legitimize crypto.

You’re reading the premium daily Crypto is Macro Now newsletter, in which I look at the growing overlap between the crypto and macro landscapes. If you’re not a subscriber, I hope you’ll consider becoming one?

IN THIS NEWSLETTER:

• Nigeria’s crypto strategy

• NFTs are securities?

• Russia: crypto settlement and bitcoin mining

• The ETF Hall of Fame

• Thailand’s tokenized handout

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WHAT I’M WATCHING:

Tuesdays are the new schedule for the regular crypto sector overviews, and today it’s the turn of regulation. You can see the previous crypto regulation overview here.

Other recent overviews:

• CBDCs: Russia, India, Canada and more

• Tokenization roundup: Slovenia, Coinbase, Superstate, Hamilton Lane, Franklin Templeton     

• Stablecoins: Tether, Russia, treasury tokens and e-commerce stablecoins

This month’s focus is on Nigeria, which has issued its first crypto platform licenses (although I think this is about more than a sudden pivot to supporting new types of assets). I also touch on the SEC’s possible pending action against NFT platform OpenSea, and Russia’s crypto scramble.

Nigeria’s crypto strategy

The past couple of weeks have seen a couple of big crypto-related developments in Nigeria, the very same country which until recently had a ban on platform crypto trading.

One is that Nigeria is preparing a crypto tax proposal – if the government is planning to tax it, then the government is planning to support its use. Although, as we saw with India, tax policy can be wielded to dampen crypto activity.

Another is that the country’s Securities and Exchange Commission (SEC) has granted its first official licenses to two crypto exchanges, Busha and Quidax. It has also admitted five crypto asset startups (Trovotech, Wrapped CBDC, HXAfrica, Dream City Capital and Blockvault Custodian) into a pre-registration regime designed to “test run” digital asset business models.

This is a big about-face for a government that has so far seemed determined to dampen crypto interest. In 2021, it banned commercial banks from servicing crypto firms. While banks still can’t trade or hold crypto themselves, the ban was removed last December and initial licensing requirements were established.

It hasn’t been smooth sailing for the industry since then, though, far from it. In February, access to Nigerian exchanges was reportedly blocked (in some cases temporarily), and officials detained two Binance executives that had flown to Nigeria to help sort out issues with the tax authorities. One later escaped, but Tigran Gambaryan – a US citizen – is currently still in a Nigerian jail, charged with money laundering and currency speculation (the charge of tax fraud was recently dropped).

In April, four of Nigeria’s leading fintech platforms were blocked from onboarding new customers because of their use by crypto traders, and over 1,100 bank accounts linked to crypto traders were frozen. Not long after, Nigeria’s National Security Adviser classified crypto trading as a national security issue. According to officials, the crypto market is largely to blame for the country’s currency woes, not the eye-watering inflation, fiscal mismanagement and social unrest.

The “big stick” approach seems to be softening, however. In May, the agency appointed Dr. Emomotimi Agama, a self-declared crypto and fintech “enthusiast”, to the post of Director General.

Now, there seem to be moves to encourage crypto ecosystem development, while insisting on regulation. Why the change of heart?