The Securities and Exchange Commission, Nigeria (SEC Nigeria), has released a new statement regarding the status of cryptocurrencies and other forms of digital assets in the country. This marks the first significant step taken by the regulator to bring digital assets under its control.
The statement published on Sept. 14 recognized that digital assets provide alternative investment opportunities for the populace, but at the same time, must be conducted in a manner that protects the interest of investors and ensures market integrity.
The regulator said that the new clarifications are not designed to “stifle innovation, but to create standards that encourage ethical practices.”
Parties regulated under the new guidelines will include corporate or individual investors, whose “activities involve any aspect of Blockchain-related and virtual digital asset services.” More specifically, that would consist of portfolio managers, custodians, exchanges, and third-party services.
SEC Nigeria’s classification of cryptocurrencies
Interestingly, SEC Nigeria has followed the steps of many regulators globally by classifying all forms of digital assets into three major categories. The three types include:
Crypto Assets (Non-fiat Virtual Currency): A class that likely includes Bitcoin, the regulator will treat these kinds of assets as commodities when they’re traded or issued on a locally-approved trading venue, such as a national stock exchange.
Utility Tokens (Non-Security Tokens): This category will also be classified as commodities. Spot trading and regular transactions will not fall under the SEC’s purview. The regulator will only have jurisdiction on these assets if they’re traded on a locally-approved trading venue.
Security Tokens: The regulator will consider all digital tokens that have the characteristics of a “security” as security tokens. Prospective issuers will have to obtain approval before doing so.
Additionally, the regulator mentioned that all forms of token sales, including digital assets token offering (DATOs), initial coin offerings (ICOs), security token offerings (STOs), and other Blockchain-based offerings of digital assets within the country will now be regulated.
Entities that are already offering such services will have three (3) months to either submit the initial assessment filing and documents for registration proper to operate within the country.
Local crypto community reacts to SEC Nigeria guidelines
Several reports confirm the accelerated adoption of Bitcoin and cryptocurrencies in Nigeria, meaning that the new guidelines by SEC Nigeria were almost certain to meet different responses from the local ecosystem.
Paul Ezeafulukwe, Chairman of the Stakeholders in Blockchain Association of Nigeria (SiBAN) shared his thoughts, lauding the regulatory statement as what is currently needed is to “harmonize with industry players and practitioners so as not to inhibit the growth of the sector.”
“Ultimately it is a win-win for all, the investing public, the industry players, and the regulatory agencies, and all beneficial bodies. Most importantly it is a big plus for the industry,” he added.
Gilbert Joekpata, Founder Smart Investors Lodge shared similar thoughts. He told Coinfomania that the bright side of the latest guideline is that “investors’ confidence grows in a regulated marketplace, identifying ICOs as a workable investment option and bring liquidity from accredited investors into the market.”
He, however, admitted that “proper regulatory compliance will affect user experience and the overall phenomenal growth of blockchain start-ups in the country.”
Andrew Ameh, a crypto trader and Founder of 15% Trade Crew Community also heralded the development as “a good one, especially the idea of telling crypto ventures and companies to set up subsidiaries in Nigeria.”
He expressed a conviction that it will not only ‘boost the nation’s economy but also go a long way in boosting crypto adoption in the country since many people will get to learn about it for the first time.’