The Securities and Exchange Commission (SEC) in Nigeria has released a new set of regulations to guide digital assets trading in its bid to protect investors in the country.
According to the new regulation, digital assets, otherwise known as cryptocurrencies, would be classified as securities regulated by the commission.
Nigeria’s central bank had barred financial service providers from facilitating crypto-related transactions last year, a move that was kicked against by its mostly youthful population. However, the country’s SEC had hinted at its willingness to regulate and not ban the industry.
So with this new rule coming into play, the country’s crypto industry could get the much-needed regulatory clarity on what constitutes a digital asset or security.
Nigeria’s Digital Asset Rules
Individuals or entities looking to operate as a virtual asset service providers would have to get a virtual asset service provider (VASP) license. Apart from that, projects that would conduct initial coin offerings targeting Nigerians must register with the commission — these projects are not allowed to raise beyond 10 billion naira ($24 million).
Per the document released by the regulator, the commission would have 30 days to review applications before determining whether the digital asset constitutes a “security.”
Also, the new regulations allow a digital assets offering platform (DAOP) to provide its custodial services. The DAOP, however, has to carry out due diligence on any project that would be listed on its platform.
Nigerians are one of the biggest adopters of cryptocurrency in the world. Per a recent CoinMarketCap report, the high inflation rate in the country is driving crypto adoption as citizens use digital assets like USDT, and others to hedge against their falling naira.