Nigeria’s SEC Issues New Guidance for Crypto, Classifies Them as Securities

15 May 2022, 12:00 GMT+0000
Updated by Ryan James
15 May 2022, 12:00 GMT+0000
In Brief
  • Nigeria’s SEC has released new regulations to guide the use of crypto in the country.
  • Crypto service providers looking to operate in the country must register with the regulator.
  • Nigeria’s Central bank had previously barred commercial banks from facilitating crypto-related transactions.
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Nigeria’s Securities and Exchange Commission has released new rules to guide the issuance, custody, and exchange of digital assets, while also classifying them as securities.

According to the rules, entities seeking to offer crypto services or products in the country will have to get a virtual assets service provider (VASP) license. But they may also require other licenses based on the category or industry they operate in. 

VASP license has several obligations, including employing anti-money laundering and combating financing terrorism standards. It’ll also include disclaimers and require users to sign a risk acknowledgment form before using.

The rules also require exchanges providing services to Nigerians to secure a permit. The exchanges will also have to provide reports regularly about their trading and submit periodic compliance reports.

Exchanges also need the permission of the SEC to list any asset. Thus, they’ll have to apply for the listing, and the Commission must have no objection to such assets.

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The SEC also provided for initial coin offerings and token issuance in general. Companies operating in the country or servicing Nigerians will need first to register their intent to issue a token. Then, it’s up to the Commission to issue approval. For tokens deemed as securities, the issuer must also follow securities laws.

The rules are quite comprehensive and cover most of the basic issues necessary for crypto regulations.

Nigeria’s Central Bank banned banks from crypto transactions

This is a direct opposite of the Central Bank of Nigeria’s directives on crypto, which banned commercial banks in the county from facilitating crypto-related transactions, leading to the rise of peer-to-peer trading among citizens. 

While the ban stifled crypto innovations, it didn’t stop its adoption, and Nigeria has become one of the leading countries for crypto use due to its poor economic state of the country.

These new rules could finally bring some legitimacy and order to the industry. The rules could also guide the CBN in providing a framework for how the banks can interact with crypto.

Just recently, the Apex bank revealed that it was upgrading the use cases of its CBDC to include bill payment options.

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Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.