Local and international experts have urged Nigeria to update its legal and regulatory framework for the digital assets and cryptocurrency industry.
They noted that the industry has continued to grow despite local and international attempts to stiffle it, adding that the digital asset market is attracting a lot of investments.
They argued that this makes up-to-date regulatory guidelines by the Securities and Exchange Commission (SEC), Central Bank of Nigeria (CBN) and other relevant agencies, a necessity.
The experts made the call at a two-day workshop by the Attorney- General Alliance Africa (AGA-Africa) in collaboration with the Nigerian Bar Association (NBA).
The workshop, titled ‘Digital asset and crypto currency: legal & cyber security issues’ was held last Wednesday and Thursday in Lagos.
Speakers at the event included Heather Martin, Global Disputes Investigations & White Collar Defence, Jones Day; Daniel Awe, Head of Africa FinTech Foundry (AFF), Nigeria; Roger Geisler, Special Agent at Arizona Attorney General’s Office; Isioma Nnenna Alexis Idigbe, Head Media, Entertainment and Intellectual Property Law,PUNUKA Attorneys & Solicitor; and Chairman of the NBA Lagos Branch, Ikechukwu Uwanna.
They noted that the Central Bank of Nigeria (CBN) banned cryptocurrency to, among others, discourage the flow of illicit financial flow, money laundering and other llegal activities, but that Nigerians are still trading in digital currency and assets.
Emphasising the need for clear-cut guidelines for the industry, Martin said data showed Nigerians were taken up with cryptocurrency.
“Nigeria has shown more interest in crypto than any other country in the world. The United Arab Emirates ranks second with the second highest proportion of its population searching for the word “cryptocurrency” and the term “invest in crypto”, she said.
Geisler noted that a poorly regulated digital assets industry was a risk to legitimate players and could cause users great financial loss.
“Fraudulent wallets have been discovered on Google Play Store and are often cloned to look authentic. Once a person loads the wallet, the money is soon taken and the wallet is left empty,” he said.
Also harping on the growing global importance of digital assets, Awe – relying on data from the World Economic Forum – said: “The projected tokenised market volume is likely to reach $24 trillion by 2027. In other words, 10 per cent of the world’s GDP will be tokenised and on a blockchain.”
The speakers also harped on smart contracts, commonly associated with cryptocurrencies.
A smart contract is a computer programme or a transaction protocol that is intended to automatically execute, control or document legally relevant events and actions according to the terms of a contract or an agreement.
The objectives of smart contracts are the reduction of need for trusted intermediators, arbitrations costs, fraud losses, as well as the reduction of malicious and accidental exceptions.
They noted that there is a role for lawyers in the industry and lawyers, especially in making smart contracts.
They noted that smart contracts are binding by ensuring that all the criteria for the contract to run.
The risk, they said, is if the developer makes an error. “You have to ensure that whoever is developing the smart contract is an expert to ensure that it would deliver on its due date.”
They, however, noted that smart contracts are not immune to hacking, adding that “they are not completely secure, and this is not because of the technology, but in regards to how it is constructed and the data fed into it.”
In his closing remarks, Ikechukwu Uwanna thanked the participants for taking part and hoped the knowledge they gained would be used for the betterment of the country.