Nigerian Stock Exchange has revealed plans to start a blockchain-enabled exchange platform next year to deepen trade and attract young investors to the market.
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The move follows the introduction of regulations to guide trade in digital assets by the Nigerian Securities and Exchange Commission, and the growing interest to adopt the distributed-ledger technology by businesses and policy makers across the continent including in Kenya and South Africa.
The exchange looks to deploy the blockchain technology in settlement of capital market transactions, Temi Popoola, the chief executive of Nigeria Exchange Ltd., said in an interview. “For a lot of young and upcoming Nigerians, that is the kind of technology they adopt and we want to see how we can deploy it to grow our market,” Temi said.
The plan is unfolding in the wake of a rout in cryptocurrency markets following the collapse of the Terra blockchain in May. Bitcoin has plunged more than 50% since reaching a record high last November.
While young Nigerians account for the largest volume of cryptocurrency transactions outside the US, according to Paxful, a Bitcoin marketplace, they have largely ignored the local bourse. Nigerians traded $185 million of Bitcoins on the platform in the first three months of the year, accounting for a quarter of transactions in the period on Paxful.
The NSE will partner with a technology firm and get the approval of regulators before the launch in 2023, according to Popoola. “Blockchain technology can facilitate different parts of the capital market, whether around creation of products or facilitation of the Exchange to trade financial assets,” he added.