The Nigerian securities watchdog has officially recognized digital assets. In a new statement, the Nigerian Securities and Exchange Commission (SEC) recognized the rising prominence of digital assets as an investment opportunity and pledged to formulate regulations that will spur innovation and adoption.
“Digital assets offerings provide alternative investment opportunities for the investing public; it is therefore essential to ensure that these offerings operate in a manner that is consistent with investor protection, the interest of the public, market integrity and transparency,” the regulator stated.
The SEC has adopted a three-pronged objective to regulate innovation hinged on market deepening, safety and providing solutions to problems. In line with this objective, the watchdog revealed that it will be regulating digital tokens and currencies if they qualify as securities transactions.
The SEC will regard digital assets as securities unless proven otherwise, it stated. “Thus, the burden of proving that the crypto assets proposed to be offered are not securities and therefore not under the jurisdiction of the SEC, is placed on the issuer or sponsor of the said assets.”
Utility tokens that simply provide users with a product or service will be treated as commodities and will not fall under the purview of the regulator.
The regulator further revealed that all ICOs, STOs and other blockchain-based offers of digital assets launched in Nigeria or targeting Nigerian investors will fall under its oversight.
“Existing digital assets offerings prior to the implementation 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.”
Individuals or firms operating any blockchain-related business are required to register with the commission as well. These businesses include “reception, transmission and execution of orders on behalf of other persons, dealers on own account, portfolio management, investment advice, custodian or nominee services,” the regulator revealed.
The recognition and regulation of digital currencies by the SEC will ensure Nigerian investors are protected from scammers who are rife in the industry, Ayodeji Ebo believes. Ebo, who is the managing director at Afrivest Securities in Lagos told Bloomberg, “Crypto transactions are already happening and the earlier it is regulated, the less havoc on the economy. It’s another way to provide alternative assets to investors.”
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