A bill seeking to establish the fintech regulatory commission has passed the second reading at the house of representatives.

Sponsored by Fuad Laguda, an All Progressives Congress (APC) lawmaker representing Surulere I federal constituency of Lagos state, scaled the second reading during Tuesday’s plenary.

Leading the debate on the bill, Laguda said the commisison will oversee and regulate the rapid-growing fintech industry in Nigeria.

“The need for this regulation has grown exponentially in recent years, with millions of Nigerians relying on digital payment platforms, mobile money services, and other fintech products for their financial transactions,” he said.

“However, the lack of a clear regulatory framework has led to concern about commercial protection, financial stability, and the prevention of financial crimes.

The legislator said the commission will provide a “clear regulatory framework” for the fintech industry, ensuring that operators comply with established standards and guidelines.

The commissioner is expected to protect consumers by ensuring that fintech companies operate fairly, transparently, and securely, while promoting innovation in the fintech sector and minimising risk to financial stability.

The rapid rise in digital transactions has prompted regulators, including the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), and National Information Technology Development Agency (NITDA), to explore new measures to address the rapidly evolving fintech environment.

In October 2024, SEC said that it will enforce regulations in the fintech ecosystem to curb the mismanagement of funds and align operators with existing rules.

Emomotimi Agama, director-general of SEC, said a regulatory environment that is conducive to the innovative use of technology is essential in the drive to transform Nigeria.

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The Director General of the National Information Technology Development Agency (NITDA), Kashifu Inuwa CCIE, has called for a concerted effort among industry players, government officials and experts to explore the transformative potential of Blockchain technology in asset management and economic development of the country.

The DG made this appeal at the Tokenised Economic Conference and Exhibitions themed; Tokenised Economy 2024; Real-World Assets Tokenisation, organised by Cyberchain in collaboration with the BAZE University and NITDA.

Recognising technology as an enabler for the nation’s GDP growth, the conference was a platform for industry professionals to share ideas and expertise in exploring opportunities in digital assets finance, capital markets, commodities, mortgage, bonds and real estate fractional ownership.

Giving his keynote address at the event, Inuwa outlined the benefits of tokenising physical and digital assets through Blockchain technology and emphasized its capacity to revolutionise asset management, exchange and security.

The DG who was represented at the event by the Director of e-Government and Digital Economy Development department, Engr. Salisu Kaka described tokenisation as converting traditional physical or digital assets into digital tokens recorded on a blockchain.

While explaining that tokens serve as digital representations of real assets, Inuwa mentioned that “when assets are tokenised, a Blockchain token is issued as a digital and legal representation of the real asset which allows assets to be sold, held and traded in a digital format, enhancing liquidity and accessibility.”

He further emphasised that the process of tokenisation involves choosing the asset to be tokenised, complying with legal and regulatory requirements, establishing secure custody solutions and blockchain networks and distributing tokens to potential investors through secure payment channels.

Laying reference to real estate investment markets which are plagued by inefficient transfer and record-keeping processes, Inuwa averred that tokenisation would mitigate the challenges by automating these processes.

“It offers several advantages over traditional real estate financing, such as automating processes, increasing liquidity, lowering investment barriers, and improving transparency. As a result, it is considered a promising development for the future of real estate markets,” he stated.

While stressing the need for Nigeria to position itself as the lead nation in the tokenised economy in Africa, he lauded the Lagos State’s plan to tokenise real estate and described it as a bold move that could set an example for other states to follow.

He added that tokenising other key sectors, including agriculture, oil and gas, securities, bonds and derivatives could further accelerate wealth creation and economic growth in the country.

Inuwa however noted that it was essential to establish a clear regulatory framework that would boost the confidence of investors as well as develop strong infrastructures that would support the tokenised economy.

He disclosed that since the launch of the National Blockchain Policy (NBP) and the inauguration of its steering committee, NITDA has been at the forefront of promoting the use of emerging technologies particularly blockchain technology by working closely with the blockchain ecosystem in promoting the adoption of the blockchain technology across all sectors of the country.

“Real-world asset tokenisation would offer a promising avenue for Nigeria to unlock its economic potential and improve the lives of its citizens. Nigeria has the potential to become a leader in the tokenised economy in Africa. By investing in infrastructure, education, and a supportive regulatory environment, Nigeria can unlock the full potential of tokenisation and drive economic growth.” he concluded.

In his remark, the Director General of the Securities and Exchange Commission (SEC), Dr. Emomotimi Agama spoke on how tokenisation breaks down traditional barriers and makes investments in areas like real estate and art accessible to a wider range of people, regardless of their financial status.

He stated that the shift would allow for the diversification of investments and would encourage more people to participate in previously exclusive markets.

Noting that tokenisation is a process that converts real-world assets into digital tokens, he said “Through tokenisation, these highly qualified assets become more accessible to a broader audience, democratizing wealth and enabling more inclusive financial participation.”

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The Securities and Exchange Commission has reiterated that only approved digital exchanges and platforms were legally authorised to carry out the business of crypto trading in any form in Nigeria.

In a statement obtained from its website on Monday, the SEC warned the public against dealing with illegal operators who have not applied to and received the commission’s approval under the Accelerated Regulatory Incubation Programme or the Regulatory Incubation Programme.

The SEC emphasised that ARIP and RI remained the only avenues for well-intentioned entities to legitimately introduce their digital products and services to the Nigerian capital market.

The commission advised intending investors to always confirm from the various SEC information portals whether entities purporting to provide investment services are legally empowered to do so.

“Intending investors are also reminded to always confirm from the various SEC information portals whether entities purporting to provide investment services are legally empowered to do so,” it noted.

The capital market regulator had introduced the ARIP to strategically onboard firms that had commenced operations before the release of the Rules on Virtual Asset Service Providers in May 2022.

The RI Programme was created to assess the business models of digital asset firms and test innovative products, services and technology in a real-time market environment under close supervision by the SEC, the regulator said.

Last week, the SEC approved in principle two digital asset exchanges, Busha Digital Limited and Quidax Technologies Limited, and admitted five firms to test their models and technology under the RI Programme.

The Director-General of SEC, Dr Emomotimi Agama, attributed the recent approval of two cryptocurrency exchanges to the growing enthusiasm among young Nigerians for digital assets.

He underlined the need for a transparent regulatory framework that safeguards investors while fostering innovation.

The SEC DG stressed that comprehensive disclosure, robust anti-money laundering measures, and effective counter-terrorism financing protocols are crucial elements of the SEC’s regulatory approach in the cryptocurrency sector.

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