Nigeria, a country not short on entrepreneurial spirit and home to arguably the most tech-savvy population in Africa, has now just done that. The new Investment and Securities Act (ISA) 2025 weirdly misconstrues Bitcoin as a security. This decision is not merely a regulator’s mistake; it is an overt attack on African innovation. It’s the equivalent of trying to regulate social media with rules written for the Pony Express. The SEC is selling all of these changes as ways to “foster innovation” and “protect investors.” Really? Let's dissect the real consequences.

Innovation Suffocated, Not Nurtured Here

Let's be clear: Bitcoin is not a security. It’s not a stock, it’s not a bond, and it definitely doesn’t guarantee dividends. Consider it digital gold. It’s a decentralized, peer-to-peer asset. One whose value is determined by supply and demand, not corporate roadmaps. To classify it as a security therefore admits a deeper lack of understanding about its qualities.

Think of it like this: imagine trying to regulate the open-source software movement by treating every line of code as a patented invention. The result? Innovation grinds to a halt. That's precisely what ISA 2025 does to Nigeria's burgeoning crypto scene.

Unbanked Excluded, Not Empowered

Nigeria now has the second-highest Bitcoin adoption rate in the world. Why? Because for millions of Nigerians, Bitcoin is saving their lives. It’s one of the best ways to get around a devaluing Naira, crippling inflation, and draconian banking restrictions. That’s how they get remittances, save for emergencies and future needs, and do business on a micro-level. It’s financial inclusion in action, infinitely accelerated by the power of decentralization.

ISA 2025 creates oppressive compliance burdens for Virtual Asset Service Providers (VASPs) and exchanges. Consequently, it is at worst – or perhaps best – closing the door on these folks. Small and medium-sized businesses These heightened costs of compliance will weigh disproportionately on smaller, grassroots VASPs – the very businesses that dominate the market that serves the unbanked. It’s the equivalent of trying to build a toll booth on a dirt road.

I cannot stress this enough. This isn’t only so that tech bros don’t lose money on speculative investments. This is not a story about maps and sound bites on the campaign trail.

Compliance Costs Kill Grassroots Businesses

The SEC’s top-down implementation of this rule, without any substantive consultation with stakeholders, smacks of bureaucratic arrogance. In short, they’ve engineered a framework that prioritizes big, entrenched incumbents and kneecaps their smaller competitors.

Now picture that same small, family-owned VASP in Lagos, helping local market traders access Bitcoin remittance services. Now, picture them having to navigate a mile-high mountain of compliance requirements meant for Wall Street banks. The result is inevitable: they'll be forced to close shop, stifling competition and innovation at the grassroots level.

Regulations create black markets Over-regulation doesn’t get rid of demand, it just forces it underground. By creating barriers to entry and over-regulating the crypto market, Nigeria risks pushing activity to unregulated platforms or offshore exchanges.

Capital Flight Fuels Underground Markets

This isn't theoretical. We know it’s possible because we’ve seen it happen in other, more heavily regulated industries. The result? Greater opacity, higher costs for consumers, and a loss of valuable tax dollars. And it’s as futile as trying to stop a river with sandbags. The water always finds a way.

Nigeria has the opportunity to become the clear leader in Africa’s crypto space. Instead, it has used the opportunity to signal extreme hostility to the technology, almost certainly encouraging many other jurisdictions’ investment and talent to go elsewhere.

Instead of obsessing over classifying Bitcoin as a security, the SEC should be focusing on real threats: cybersecurity and user education. Bolstering cybersecurity defenses and educating users on wallet security would do far more to protect investors than mislabeling a decentralized asset.

Cybersecurity Ignored, Real Threats Persist

It’s the equivalent of getting stuck on what color to paint the car while leaving the brakes broken. The priorities are completely skewed.

The timing of ISA 2025 is especially tone-deaf. With Bitcoin reaching all-time highs in Nigeria, and the world showing an increased interest in crypto, things should be looking up. Instead of embracing this opportunity, Nigeria is doubling down on a policy that will stifle innovation, exclude the unbanked, and ultimately harm its own economy. This is more than a miss, it’s a recipe for disaster. It’s Nigeria’s chance to change its disastrous direction.

The timing of ISA 2025 is particularly tone-deaf. Bitcoin is hitting all-time highs in Nigeria, and global interest in crypto is surging. Instead of embracing this opportunity, Nigeria is doubling down on a policy that will stifle innovation, exclude the unbanked, and ultimately harm its own economy. This isn't just a blunder; it's a tragedy in the making. It's time for Nigeria to reconsider this disastrous course.