When it comes to Cryptocurrency and Blockchain Regulation and Policy, many Countries are facing difficulties to embrace the evolving innovations. Despite being a Third World Country, Nigeria has been able to come up with Regulations and Policy for Blockchain. The Securities and Exchange Commission(SEC) came up with Digital Asset Regulations in 2022, while Ex-President Muhammadu Buhari signed the National Blockchain Policy into law in 2023.
It will be a great idea, if other Countries follow suit, most especially Ghana, as it has some very close economic ties with Nigeria, and it also has the second largest blockchain community in West Africa, after Nigeria. The Digital Asset Regulation by the Securities and Exchange Commission(SEC) of Nigeria is straightforward and stress free. The Commission is set to implement the new rules on issuance, offering platforms, and custody of digital assets.
These rules cover the issuance of digital assets as securities, registration requirements for digital asset offering platforms, registration requirements for digital asset custodians, rules on virtual asset service providers, and rules on digital asset exchanges. The rules apply to all issuers seeking to raise capital through digital asset offerings.
Definitions include a digital token representing assets,nitial Coin Offerings (ICOs), ICO projects, hard caps, lock-up periods, pre-offer periods, securities token offerings, soft caps, and white papers. These rules are in addition to any requirements under securities laws or other Commission-issued rules.
The Nigerian Securities and Exchange Commission (SEC) requires all promoters, entities, or businesses proposing to conduct initial digital asset offerings within Nigeria or targeting Nigerians to submit an assessment form and draft a white paper. The white paper should include a brief description of the issuer's business, how the project will benefit investors, the value of each token, lock-up period, returns, profits, bonuses, rights, and privileges, the use of proceeds from the sale, the timeline for project completion, accounting and valuation treatments, technical description of the protocol, platform, or application, target market, currency or other assets, proposed offer period, soft and hard caps, price per token, distribution policy, risks, system architecture, documentation, and flowcharts. The Commission must review the initial assessment filing within 30 days to determine if the digital asset constitutes a "security" under the Investment and Securities Act 2007. The issuer may revise the contents of the whitepaper or other documents before the Commission determines whether the digital assets are securities.
In Ghana, there has been issues of Entities launching their own Coins, and Tokens without due diligence, and this has led to people getting repeatedly scammed of their funds. By making sure ICOs are registered, the identity of Entities will be known, and it will be difficult for them to abscond with funds of Investors. There must be emphasis on full disclosure, and regular reports regarding the Coin or Token. White Papers should also be released to let investors understand what they are getting into, and Project Creators must be legally bounded to follow everything in the White Paper.
If the digital asset is determined to be a security, the issuer must apply to register the securities. Upon determining whether the digital assets are securities, the issuer must apply for registration, including a registration statement, Know Your Customer(KYC) procedures, security protocols, solicitor's opinion, escrow agreement, corporate governance disclosures, evidence of payment, and other information the Commission determines. The Commission may grant registration to the digital assets if the issuer complies with registration requirements.
In Ghana, a digital asset can be declared a security, as long as it passes “The Howey Test”, which states that an asset can only be declared a security, if there is an investment of money, with expectation of profits, in a common enterprise, based on the effort of others. The Entity that issues the security must be fully registered with the Securities and Exchange Commission(SEC) of Ghana, and be made to operate as a Public Company.
The National Blockchain Policy for Nigeria aims to promote the adoption and utilization of Blockchain Technology in Nigeria, aiming to enhance transparency, accountability, security, financial inclusion, job creation, and economic growth. The policy is designed to address key issues such as governance, interoperability, security, and regulatory compliance, while also offering direction and guidance to stakeholders in both public and private sectors to ensure the adoption, innovative, and responsible use of Blockchain Technology.
Ghana needs to create a Blockchain Policy, in order to help it transition into Industry 4.0. This will make Ghana’s industries more efficient, and contribute to the development of the economy. The Transparency feature of the Blockchain will increase Accountability, and reduce corruption. It will also increase financial inclusion, and reduce unemployment rate.
The policy focuses on talent development, innovation, blockchain adoption, financial services, government and corporate digital services, expected outcomes, implementation structure, and stakeholders' involvement. The Central Bank of Nigeria (CBN), the Federal Capital Territory Administration (FCTA), the Federal Ministry of Communications, Innovation and Digital Economy (FMCIDE), and other relevant regulatory bodies are tasked with developing regulatory instruments for the deployment of Blockchain Technology across various sectors of the economy.
In Ghana, the Bank of Ghana(BOG), Ministry of Communications and Digitalization should be in charge of institutionalizing Blockchain, and making it available in various Industries in the Country.
The National Blockchain Policy is in line with Ex-President Muhammadu Buhari's vision to diversify the Nigerian economy. The growth of the digital economy over the past few years is a good indication that this sector can serve as a catalyst for the rapid development of the economy.
If Ghana had implemented a Blockchain Policy a few years back, it would have helped in the One District One Factory(1D1F) policy, because Blockchain will enable Interoperability across various Industries, and will also allow new business models to be created e.g. A Token-based economy.
To lay a solid foundation to achieve the maximum benefit that Blockchain Technology has to offer in Nigeria, the FMCIDE has identified talent development, innovation, and adoption as the key areas to harness the potential of Blockchain Technology in Nigeria. The aim is to provide training and capacity-building programs that will equip Nigerians with the necessary innovative skills to leverage Blockchain Technology to grow our digital economy while also promoting adoption in the public and private sectors. The National Blockchain Policy for Nigeria will enable us to maximize the benefits of this technology for the development of Nigeria.
Ghana should create Blockchain Education programs at the Primary, Secondary and Tertiary levels. There should be seminars for the private sector, and there should be a Public-Private Partnership to accelerate Blockchain Literacy in the Country.
It is estimated that, more than 900,000 active and passive cryptocurrency users are in Ghana, and by 2028 with a growth rate of 8%, revenue could reach more than $71 billion. The rate of adoption of digital assets will increase transaction and financial inclusion. Adult population of about 17% Ghanaians own cryptocurrencies and other digital assets, with over 52% ownership of Bitcoin. Ghana could benefit from a huge revenue stream.
It is important for stakeholders to support this initiative as we work towards making Ghana a leading hub for Blockchain innovation and development. Creating a Blockchain Policy for Ghana will promote the adoption and utilization of Blockchain Technology in Ghana, aiming to boost innovation, improve public services, create job opportunities to reduce poverty, reduce corruption, and drive economic growth. The policy will also address key issues such as governance, interoperability, security, and regulatory compliance, while also ensuring the growth of indigenous talent in Blockchain Technology solution development.
The development a blockchain policy is crucial for the advancement of Ghana’s digital economy. It will be a trump card to drive for transparent innovation and efficient service delivery.
Haqi Ailara
Research Intern
Institute for Liberty and Policy Innovation
Tema.
