Senate passes bill to regulate cryptocurrency, safeguard investors

A bill seeking to regulate cryptocurrency, protect investors and strengthen Nigeria’s digital economy has passed second reading in the Senate.

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The Deputy Senate President, Barau Jibrin, who presided over the session, announced the passage of the bill during Tuesday’s plenary after a majority of senators supported it through a voice vote.

After the passage, the bill was referred to the Senate Committee on Capital Market for further legislative deliberation, including a public hearing.

The committee was directed to report back within four weeks.

The bill, sponsored by Mr Jibrin and presented on the floor of the Senate by Tahir Monguno, seeks to establish a comprehensive regulatory and supervisory framework for virtual assets, digital assets and Virtual Asset Service Providers (VASPs).

It also proposes mandatory licensing, transparency and compliance requirements for cryptocurrency exchanges operating in the country.

Mr Monguno, who is also the Senate chief whip, noted while leading the debate on the bill, that Nigeria has lagged behind several African countries in regulating the digital finance ecosystem despite recording one of the highest rates of cryptocurrency adoption on the continent.

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The senator maintained that the absence of a clear legal framework has exposed investors to risks and enabled illicit activities to thrive in the sector.

“This bill speaks directly to the realities of our time, a time when technology is reshaping the global financial system and redefining how people earn, trade, save, and invest.

“Today, millions of young Nigerians are already participating in this digital economy, trading, building fintech platforms, and innovating through blockchain technologies. Our country ranks among the top users of virtual assets globally,” he stated.

Over the years, millions of Nigerians have turned to digital assets such as Bitcoin and other cryptocurrencies for savings, cross-border transactions and investment purposes.

However, the rapid growth of the sector has occurred largely in the absence of a comprehensive legal and regulatory framework. This regulatory gap has exposed many investors to fraud, market manipulation, cybercrime and the collapse of unregistered digital investment platforms.

In recent years, thousands of Nigerians have reportedly lost substantial sums to cryptocurrency-related scams, Ponzi schemes and fraudulent exchanges operating without effective oversight.

The lack of regulation has also created concerns among policymakers and financial regulators over money laundering, terrorism financing and other illicit financial activities that could be facilitated through anonymous digital transactions.

Debate

Most senators who contributed to the debate supported the bill’s passage for second reading.

Kwara South Senator, Oyelola Ashiru, questioned why Nigeria had been slow to embrace virtual assets while other countries continued to develop their digital economy systems.

“I wonder why Nigeria is always lagging behind in taking very necessary initiatives. Countries like Kenya, South Africa, and Ghana have already covered a lot of mileage.

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“We should strive to match our brothers in Africa and across the world and, with the speed of light, proceed with the second reading of this bill,” he said.

Similarly, Lagos East Senator, Adetokunbo Abiru, expressed support for the bill but advised lawmakers to ensure that it aligns with existing legislation governing the financial sector.

“There is no doubt that the times we live in call for a bill of this nature because we live in an era of technology,” he said.

However, Mr Abiru noted that the Senate had recently passed legislation relating to investment securities and virtual assets, while other fintech-related laws are currently under review.

“What I would like to suggest is that, as important as this is, we should marry these together so that we have a holistic view of how the industry should be regulated,” the lawmaker stated.

Also contributing, Ogun Central Senator, Shuaib Salisu, noted that many of Africa’s leading fintech companies originated from Nigeria and warned that failure to regulate virtual assets could encourage criminal activities and undermine economic growth.

“If you do not provide a regulatory framework for this sector, it will go under the table in a black market environment. Once there is no transparency and activities become opaque, it allows criminal activity to take place,” he warned.

On his part, Edo North Senator, Adams Oshiomhole, said the arguments in support of the bill were compelling and self-evident.

If eventually passed by the National Assembly and assented to by President Bola Tinubu, the proposed legislation could mark a significant shift in Nigeria’s approach to digital assets.

By establishing licencing requirements for cryptocurrency exchanges and Virtual Asset Service Providers (VASPs), the law is expected to enhance transparency, strengthen investor protection and improve regulatory oversight of the sector.

A clear legal framework would boost investor confidence, attract local and foreign investment into Nigeria’s digital economy and encourage innovation in blockchain and financial technology. They also contend that formal regulation could help government agencies monitor transactions more effectively, curb illicit activities and increase tax revenues generated from the rapidly expanding digital asset market.