Some members of Nigeria’s digital asset industry have hailed a draft bill proposing hefty fines and jail terms for Ponzi scheme operators. They argue this would go a long way in undercutting criminals who use the term “crypto” to defraud unsuspecting investors. Additionally, they contend that removing such bad actors would help sanitize a sector long dominated by fraudsters.

As widely reported by Nigerian media, the country’s Securities and Exchange Commission (SEC) has proposed the Investments and Securities Bill (ISB) 2024. The bill proposes fines of up to $12,000 (NGN 20 million) or 10 years in jail for convicted offenders. The SEC, which previously presented the bill before former Nigerian leader Muhammadu Buhari’s departure, said the bill aims to make the country’s securities market more competitive.

Furthermore, the bill’s passage would enhance investor confidence, foster transparency and help modernize Nigeria’s financial markets. Although the Central Bank of Nigeria (CBN) and the Finance Ministry have reportedly flagged certain sections of the bill, Senator Osita Izunaso, chairman of the Senate Committee on Capital Market, praised its introduction, saying it could enhance Nigeria’s capital competitiveness if passed.

Similarly, key players in Nigeria’s crypto industry believe it is time such a law is enacted. Nathaniel Luz, a longtime crypto advocate and CEO of Flincap, praised the proposals, saying they would help the industry rid itself of bad actors.

“It’s one way to clear out bad actors from the industry so we can have a vibrant finance and investment ecosystem,” Luz asserted.

Fellow industry player Ophi Rume said that if passed, the law would make criminals think twice before attempting to scam under the guise of crypto investing. Rume, who has been advocating for regulation of the space, believes the bill’s passage could hold accountable those who have scammed users in the past.

Despite being perceived as one of the world’s biggest crypto markets, Nigeria has been held back by its reputation as a scammer paradise. The country’s apparent lack of laws punishing fraudsters in the investment space is believed to have contributed to the rise of crypto scams and Ponzi schemes. This lack of a deterrent has led some Nigerian celebrities to launch or endorse scam digital assets or coins.

According to Rume, the bill’s passage would also go a long way in undoing the perception that crypto equates to Ponzi schemes.

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