Nigeria’s Securities and Exchange Commission (SEC) in a landmark announcement has officially recognized crypto and digital currency as “securities” under its regulatory authority; as it proposes a new set of rules for crypto-related investments.
According to a Sep. 14 statement by SEC Nigeria, the capital market regulatory body through its power will regulate the cryptocurrency asset class and its derivatives under section 13 of the Investment and Securities Act, 2007.
The SEC defines coins and tokens or digital assets as “alternative investment opportunities” in the country’s financial markets; adding that it has classified these assets under four (4) different categories.
A snippet of the announcement reads:
The notice further says the SEC will register and approve all digital assets – cryptocurrencies and utility tokens as commodities.
However, the regulator maintains it will not be responsible for spot trading and transactions involving tokens. It adds:
“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.”
See full publication by SEC Nigeria on cryptocurrencies here.
Under the new publication, crypto startups and blockchain companies launching Initial Coin Offerings (ICO), Digital Asset Token Offerings (DATO), and Security Token Offerings (STO) in Nigeria will be required to register with the SEC not later than three months from this publication.
“Similarly, 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, sponsors, or foreign issuers targeting Nigerian investors, shall be subject to the regulation of the Commission. Existing digital assets offerings prior to the implementation of the regulatory guidelines will have three (3) months to submit the initial assessment filing of documents for registration proper, as the case may be.”
The new directive by the Nigerian SEC indicates a more crypto-friendly approach; given that before now the commission had in 2017 warned citizens to apply caution while investing in cryptocurrencies such as Bitcoin (BTC) considering its volatility in the months of its 2017 – $19,000 all-time high price.
However, 2020 has seen a 3x surge in interest in cryptocurrencies by Nigerians.
As indicated by Google trends the country ranks among the top 5 nations searching for Bitcoin; with a corresponding high bitcoin trading volume in Africa and worldwide.
This rapidly increasing interest could be the catalyst for the SEC’s new directive as it takes a regulatory position just as other developed countries.
In all, the SEC notice is a welcome development for the Nigerian cryptocurrency / Bitcoin industry as many look forward to widespread adoption.