Crowdfunding – The Nigerian Perspective
Disruptive technologies have continued to alter the way consumers, industries, and businesses operate globally. The internet has remained a leading source of disruptions in the 21st century.
Internet-backed innovations are radically shaping the hitherto conventional and traditional ways in which activities and business relationships are being carried out and replacing them with modern, quick and smart alternatives.
Recently, there have been incursions by technology into the traditional investment and fundraising/financing space. Prominent amongst the incursions include; cryptocurrency/virtual currency and crowdfunding. Although the financial services industry’s conventional regulators are very cautious concerning embracing cryptocurrency, the digital currency appears to be gaining acceptance across the world.
In September 2017, the United Kingdom Financial Conduct Authority (“FCA”) released a statement on Initial Coin Offerings (“ICO”) warning that ICOs are highly risky and speculative investments. The FCA advised that persons should only invest in an ICO if they were experienced investors, confident in the ICO project’s quality, and are prepared to lose their entire stake. Also, the Central Bank of Nigeria (“CBN”) in February 2018, cautioned
that cryptocurrencies and digital coin exchanges are not licensed or regulated by the CBN. The CBN noted that dealers and investors in any type of cryptocurrency are not protected by law in Nigeria and that consumers may lose their money without any legal redress. Despite the cautious approach by regulators to digital currency, its wide acceptance seems to be catching the regulators’ attention. The International Money Fund in August 2020.