SEC Nigeria Issues New Crypto Rules to Protect Investors and Boost Adoption

Nigeria’s Securities Exchange Commission (SEC) has released new rules on the issuance and use of digital assets, including cryptocurrencies, in the country.

SEC Nigeria Issues Crypto Rules

Recall that Coinfomania reported in April 2021 that the Commission was working with the Central Bank of Nigeria (CBN) to better understand cryptocurrencies in order to establish a comprehensive guideline for the asset class.

The new document published by the SEC covers the importance of the Virtual Asset Service Providers (VASPs) permit or license, the steps to take when issuing a digital token, and the registration requirements for digital asset platforms, exchanges and custodians.

The guidelines require any entity with the prospect of providing any crypto products or services in the country or to Nigerians to compulsorily obtain a VASP license or permit, in addition to other related documents.

SEC Nigeria Classifies Digital Assets as Securities

According to the SEC document, digital asset entities that want to offer token sales to Nigerians must submit an assessment form and a detailed draft whitepaper of the project. The whitepaper must contain information about the project, the target market, the profits and bonuses to expect, estimated risks etc.

After SEC Nigeria completes the proper review and clearance, the token issuer can then register the token as securities.

In addition, entities seeking to operate a digital asset launchpad or ICO/IEO platform must go through the VASPs requirements and pay the necessary fees.

The applicant must also include detailed information about the project, an agreement to update investors about the project and an agreement to properly monitor the usage of funds.

Digital asset custodians are obliged to protect the interests of investors, maintain an amicable relationship with investors, protect the funds of their clients and also ensure they comply with the rules and regulations.

Meanwhile, it is still unclear if the new cryptocurrency regulations in Nigeria will overturn CBN’s ban on digital assets in the country.

Coinfomania reported in February 2021 that the Central Bank of Nigeria banned all banks and financial institutions in the country from serving crypto investors and entities.