In 2021, financial institutions operating in Nigeria have been the subject of a government crackdown on cryptocurrencies, beginning with February’s notorious ban on lenders that provide services to crypto exchanges by its central bank. With much of the Nigerian crypto market peer-to-peer by necessity, Nigeria’s Securities and Exchange Commission (SEC) now aims to introduce regulations that could regularize the industry and offer investors better protection.

According to a Sept. 2 report, the SEC has established a dedicated fintech division tasked with studying crypto and blockchain investments and products — knowledge it could then marshal into a future crypto regulatory framework. Director-General Lamido Yuguda told Reuters this week that the agency is “looking at this market closely to see how we can bring out regulations that will help investors protect their investment in blockchain." 

Nigeria’s SEC, which says that all crypto assets ”are securities, unless proven otherwise,” will only be able to establish a regulatory framework if crypto is once again integrated into the country’s banking system.  The agency is also reportedly looking to work with fintech firms to strengthen the domestic market for securities to dissuade capital flight, which continues to beset multiple sectors.

Crypto’s exclusion from banking channels has not dampened the enthusiasm for the asset class. On the contrary, in a year fraught with political and economic crises, including social and economic repression and rampant inflation, crypto adoption has continued to grow.

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The Central Bank of Nigeria (CBN) is also partnering with a Barbados-based fintech firm as a technical partner for its proposed e-naira digital currency, for which it issued preliminary guidelines in August. At a meeting of the country’s Monetary Policy Committee in Abuja this spring, CBN Governor Godwin Emefiele expressed his confidence that cryptocurrencies like Bitcoin (BTC) will eventually be legal in the country but stressed that the government would do its best to prevent them from being used to finance illicit activities.