Nigeria’s SEC finally Moves to Regulate Cryptocurrenies Following widespread Interest by Investors
The Securities and Exchange Commission (SEC) in Nigeria is set to commence regulation of trades in digital assets/currencies.
Business Elites Africa understands that this is being done in a bid to protect millions of Nigerian investors are now attracted to these assets, specifically cryptocurrencies, which are believed to yield considerable returns whilst guarding against inflation.
“Digital assets offerings provide alternative investment opportunities for the investing public; it is therefore essential to ensure that these offerings operate in a manner that is consistent with investor protection, the interest of the public, market integrity and transparency.
“The general objective of regulation is not to hinder technology or stifle innovation, but to create standards that encourage ethical practices that ultimately make for a fair and efficient market,” SEC said in a notice to stateholders and the general public.
It should be noted the SEC is the apex regulatory in Nigeria for everything that has to do with investments and the capital market. Section 13 of the Investment and Securities Act of 2007 bestow the Commission with the powers to regulate investments and securities in Nigeria.
More Details about who and what will be Regulated
- In the notice, SEC further explained that all virtual crypto assets will be regulated because they qualify as securities. Therefore, issuers or sponsors of crypto securities in Nigeria will be required to duly register such securities with SEC, unless they can prove that their virtual assets do not qualify as securities.
- The process of registering virtual assets involves a two-prong approach. First, there will be an initial assessment filing to satisfy the burden of proof and a filing for registration proper, either made directly by the issuer or sponsor or where the burden of proof is not satisfied.
- Also, all Digital Assets Token Offering (DATOs), Initial Coin Offerings (ICOs), Security Token ICOs and other Blockchain-based offers of digital assets within Nigeria or by Nigerian issuers or sponsors or foreign issuers targeting Nigerian investors, shall be subject to the regulation of the Commission.
- Individuals whose activities involve any aspect of Blockchain-related and virtual digital asset services, must be registered by the Commission and as such, will be subject to the regulatory guidelines.
- All issuers or sponsors (including startups and bigger corporations) who deals in virtual digital assets shall be guided by the Commission’s regulation.
- Note that a recognition status will also be accorded, where the country of the foreign issuer or sponsor is a member of the International Organization of Securities Commissions (IOSCO).
A Quick Overview of Cryptocurrencies in Nigeria
In recent times, many Nigerian investors have become quite interested cryptocurrencies because of widespread belief that it gives higher interests. Interestingly, it took Nigerian regulators a long time to come to terms with cryptocurrencies, with the Central Bank of Nigeria stating in 20118 that cryptocurrencies were not regarded as money.
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