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Nigerian SEC’s regulation of crypto assets as securities could be the turning point

Photo of: Dennis Ramos
by Dennis Ramos

The Securities and Exchange Commission body in Nigeria that overlooks matters related to the financial world has made a big announcement. The announcement may be what we call a landmark judgment for the future of crypto in Nigeria. On September 14th, Monday, it officially recognized crypto assets in the category of securities bringing it under regulatory jurisdiction. 

The Commission had made it official when it issued a statement on its website. It explained to the investors and the interest parties that it classifies such assets under the regulatory guidelines of Nigeria’s Investment and Securities Act 2007. Nigeria is one of the largest economies in Africa which has shown some remarkable crypto adoption rates in recent years. With the release of such a statement, it is clear that a regulator in the region has taken a serious stance on the cryptocurrency and its future. 

Source: Twitter

Prior to the announcement, every other announcement with this regard that was made did not recognize crypto-assets under Nigerian law. The only thing they did not do was to declare them illegal. The statement in particular focussed on defining the future issuance of the asset as it was now under the wings of regulation, something different than what it usually is. It has also declared that any fundraising activities like Initial coin offerings (ICO), Digital asset token offerings (DATO), and Security token offerings (STO) here will be regulated activities and will comply with the SEC legislation. 

We can easily draw parallels to a similar action taken by the US SEC in the regulation of ICOs. The announcement so made draws a fine line by giving crypto assets a legal identity and more acceptability in the country. A few lines from the announcement reads as below:

Any person, (individual or corporate) 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. Such services include, but are not limited to reception, transmission, and execution of orders on behalf of other persons, dealers on own account, portfolio management, investment advice, custodian, or nominee services.

Most importantly, it is listing cryptocurrency trading as a regulated activity. This puts an end to 5 years of regulatory issues and problems that the country faced with respect to cryptos. It is well known that the police and security forces have arbitrarily declared cryptocurrency as something illegal or fraudulent as it was not under any legislation. 

Nigeria is by far the largest crypto market in Africa and also tops in terms of crypto adoption there. When it comes to regulation, it sure has taken the right step towards regulation. The SEC will have jurisdiction over tradable assets whilst the Central Bank of Nigeria (CBN) will exhibit control over whether crypto will be seen as a legal tender in Nigeria or not. Nairametrics Economic Analyst William Ukpe said:

“In the long run, the guidelines show that the SEC does not see crypto as a threat, and one thing Nigeria’s economic history has shown is that where the government does not stifle innovation, the market also wins. However, we wait for CBN’s response – that is what will truly show if Nigeria is ready for the cryptocurrency revolution.”