Nigeria Rolls Out Guidelines to Regulate Digital Assets
By Bashir Olanrewaju
Nigeria’s Securities and Exchange Commission (SEC) has rolled out guidelines for the regulation of digital assets, including cryptocurrencies, in order to ensure investor protection and market efficiency.
Under the guidelines published on its website, crypto assets are classified as “a digital representation of value” used as a means of exchange, a unit of account or a store of value, which “does not have legal tender status in any jurisdiction.”
In this case, its use in the terms described is “only by agreement within the community of users,” SEC said in the statement.
Under the regulators categorization, a crypto asset will be treated as a commodity if it’s traded traded on a “recognized investment exchange” or if issued as an investment. Trading in utility tokens used to provide products or services won’t come under regulation unless conducted on an approved investment exchange.
Security tokens representing assets earning dividends and interest payments will be considered securities of the form offered in primary or secondary markets, dealings and investments.
Derivatives and collective investments denominated as digital assets will be regulated as “specified investments” under the relevant SEC rules and regulations. “Market intermediaries and market operators dealing in such derivatives and collective investment funds will need to be registered / approved by SEC, the regulator said.
Digital assets or offering existing before the introduction of the regulatory guidelines “will have three (3) months to either submit the initial assessment filing or documents for registration proper, as the case may be,” SEC said.
Many Nigerians have in recent years taken to investing in crypto currencies as a hedge against spiralling inflation and a relentless depreciation in the value of the naira. The Central Bank of Nigeria last year barred the country’s banks from transacting with crypto exchanges to curb exchange-rate pressures.
Nonetheless, Nigerians bought cryptos worth 1.5 billion dollars in the first 11 months of last year from the peer-to-peer trading platform, Paxful, indicating sustained interest.