EU’s MiCA inspires Nigerian policy analyst to push for similar crypto laws
The European Union’s crypto-focused MiCA legislation, designed to govern the crypto sector, went into effect on June 30, almost a year after it was finalized in April 2023. The aim of the legislation is to ensure that investors engaged in the crypto sector across the EU region are protected from the financial risk and volatility factors that volatile crypto assets are notorious for. Policy analysts are urging lawmakers in Nigeria and other neighboring countries to take inspiration from the EU in developing their own crypto regulations.
What has Nigeria learned from the EU’s MiCA?
Nigerian policymakers are impressed with the MiCA laws because they prioritize the growth of this niche sector while protecting the interests of investors. Nigerian policy analyst Obinna Uzoije recently said in a CoinTelegraph Interview that crypto regulations such as MiCA provide more clarity on what crypto companies and investors can and cannot do.
Uzoije said he has advised the Economic Community of West African States (ECOWAS) to examine the complexity of MiCA and how the legal framework has been implemented systematically and uniformly across the EU region.
The ECOWAS region consists of fifteen countries including Nigeria, Ghana, Guinea, and Senegal. Out of these fifteen countries, Nigeria and a few others are crypto-friendly while some countries like Sierra Leone are strictly anti-crypto where crypto activities are banned which has confused the other countries.
Uzoije has reportedly suggested to ECOWAS countries to find a middle ground for crypto activities so that they can at least be used to boost the financial status of these countries. Uniform regulations for virtual assets, according to Uzoije, will not only attract businesses looking for crypto-friendly regions to ECOWAS but also diversify the investment options for these countries and their citizens, the report added.
In addition, a concrete legislation around crypto could subsequently curb cases of crypto abuse for criminal activities such as money laundering and terrorist financing emanating from the West African region. So far, the ECOWAS Commission led by Imar Alieu Touray has not responded to Uzoije’s suggestions.
MiCA explained
The MiCA or Markets in Crypto Assets framework was given the green light by EU regulators in October 2022. The rules that form part of this legislation cover preventive and risk-mitigating steps related to crypto-based activities such as insider trading, unlawful disclosure of inside information and market manipulation.
Under these laws, any Web3 company that wants to operate in the EU must first obtain a license from at least one of the EU’s 27 national financial regulators. Crypto-related companies are also required to publish whitepapers on the products and services they offer, along with clear risk warnings and financial implications.
Earlier in June, the European Banking Authority (EBA) finalized the technical standards that Web3 companies must comply with before they can operate in the EU under the MiCA regulation. The EBA addressed a number of issues in its final draft technical standards for MiCA, including those related to liquidity requirements, stress testing programs, asset reserves and recovery plans. The law also strengthens oversight of asset-referenced tokens (ARTs) — including stablecoins, while also increasing monitoring of e-money tokens (EMTs) such as CBDCs.
