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  • Rilwan Shittu

Cryptocurrency Regulation – Emerging Trends

With COVID 19 on the horizon, the world has witnessed an increase in the adoption of technology in all facets of human life. This has also transcended to adoption of digital currencies not just as means of facilitating peer to peer payments or speculative trading, but also as a very useful tool for expediting cross-border payments, hedging against currency and inflation risks and storing wealth. As of February 2021, the circa 2,500 cryptocurrencies currently trading in the market are worth more than 252.5 trillion US dollars. The market capitalization of Bitcoin, the most popular cryptocurrency, currently sits at more than 600 billion US dollars, a 600% increase from its 1 billion US dollars market capitalization in 2013.

As the digital currency disruption continues to emerge and cryptocurrency becomes even more mainstream, the law is placed in a very unique position to not only evolve along with the technology but to also anticipate potential risks for relevant stakeholders and the global financial system. A popular school of thought is that the law should achieve this objective in a manner that does not stifle its growth while at the same time provide sufficient protection and stability for financial systems.

In this article, I will discuss some of the recent developments and emerging trends across some select jurisdictions where we have witnessed a lot of activity in the past year.

The United States

The US remains one of the more crypto-friendly jurisdictions in the world and has generally maintained a progressive disposition to its regulation. Although we have yet to see legislation at the federal level, we have seen increased regulatory movement at the state and agency level, led by the efforts of the Financial Crimes Enforcement Network (FinCEN), Securities and Exchange Commission and the Internal Revenue Service (IRS). These agencies have taken different approach to the definition of cryptocurrencies and its regulation. While the IRS has issued tax guidance considering cryptocurrency as property, the FinCEN has declined to accept cryptocurrency as a legal tender. At the state level, some states like Maryland and Iowa have issued cautions to the public in dealing with cryptocurrencies and prohibiting state agencies from accepting cryptocurrency as a form of payment. Other states like Colorado and Wyoming have acknowledged crypto as an instrument of monetary value. Ohio recently started accepting payment of taxes in cryptocurrency.

UK & The EU

The volatile nature of cryptocurrency, among other risks has been a major concern for regulators in the UK and the European Union (EU). These concerns have informed their approach to its regulation. While there are no formal laws in place, the UK’s Financial Conduct Authority and the European Central Bank have released statements calling for more strict regulatory scrutiny for cryptocurrencies. The President of the ECB recently called for cryptocurrency to be agreed and regulated at a global level to mitigate the risks associated with its adoption.


The Reserve Bank of India, India’s central bank had earlier in 2018 issued an order banning financial institutions from transacting with any entity involved in cryptocurrency. This order was challenged in the Supreme Court of India and in March 2020, the court overturned the ban, providing room for innovation in the space and significant relief for stakeholders in the cryptocurrency industry in India. During a session last month, the Indian parliament announced that it plans to introduce a bill that will provide a framework for the creation of an official digital currency issued by the Reserve Bank of India and will prohibit all private cryptocurrencies in India. The Indian government has always taken the conservative approach to regulating cryptocurrency. Some of its concerns center around the fact that it is considered a threat to the Indian Rupee and an outlet for bad actors for terrorist financing and other fraudulent activities.


Africa, tagged as “the next frontier of development and global economic growth”, is fast emerging as a big market for cryptocurrency. Statistics show that Nigeria currently ranks as the world's second-largest bitcoin trader after the US. In the period between 2015-2020 Nigerians traded bitcoins worth more than $566 million. Kenya and South Africa also made it into the top 10 in this list with bitcoin trades valued at $55.3 million and $18.9 million respectively in the past 5 years. A big driver of this growth and increased activity in the cryptocurrency industry in Africa has been unstable currencies and in some countries like Zimbabwe, hyperinflation and inefficiencies with the banking system. As far as regulation is concerned, we have seen African countries adopting a stricter approach to cryptocurrency regulation. The decentralized nature of cryptocurrency is seen as a threat to established structures in the financial industry, especially the banking system.

Back in April 2020, South Africa took its first major step to regulate cryptocurrency by releasing a draft regulatory framework for the regulation of cryptocurrency as a financial product under the Financial Advisory and Intermediary Services Act. The rules apply to cryptocurrency service providers, including crypto exchanges, advisors, brokers and requires them to register with South Africa’s Financial Sector Conduct Authority as financial service providers.

In Nigeria, there has been recent activity by two major regulators, the Securities and Exchange Commission (the Commission) - the financial regulator, and the Central Bank of Nigeria (CBN) - the apex bank and main regulator for banks and other financial institutions. The Commission in September 2020, released a statement on digital assets and their classification and treatment. In the statement, the SEC effectively gave recognition to digital assets including cryptocurrency and brought them within its regulatory purview. In contrast, the CBN very recently in February 2021 issued a directive to all banks and financial institutions that dealing in cryptocurrencies is “prohibited”. The CBN directed all financial institutions to identify and close the accounts of anyone involved in cryptocurrency exchange, citing that failure to follow the directive will lead to appropriate sanctions being imposed on the defaulting entity.


Cryptocurrency laws and regulations are constantly evolving. In the past year we have seen a gradual shift from cryptocurrency being largely unregulated or unrecognized to being considered as a commodity, asset or security that is subject to regulation. A prominent challenge faced by regulators lies in the difficulty in defining or classifying cryptocurrency given the many different forms it could operate as or through which it can be used. From all indications, cryptocurrency is the future of money and as the technology evolves, more use cases will emerge and more investments in cryptocurrency and crypto-backed enterprises will continue. As this happens, the expectation is that regulatory activity will also be intensified to ensure that the competing interests of all stakeholders and the global financial system are adequately balanced and safeguarded.

Rilwan Shittu serves as a Graduate Editor of the NYU Journal of Law & Business. He is an LLM candidate at NYU School of Law where he focuses on Corporations, Finance, Securities Regulation, M&A, Digital Currencies & Blockchain. Prior to attending NYU, he worked as an Associate at Olaniwun Ajayi LP, a commercial law firm in Lagos, Nigeria.


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