The days of uncertainty over crypto regulations in Nigeria may soon be at an end with regulators in the country set to examine laws and guidelines to govern the nation’s token economy.
Nigeria SEC Sets Sight on Crypto Regulation
In a communique published on Monday (September 14, 2020), the Nigeria Securities Exchange Commission (SEC) announced plans to begin regulating cryptocurrencies in the country. According to the press statement, the proposed regulatory framework aims to ensure ethical market practices while not hindering the emerging technology.
As part of the planned crypto regulations, the Nigeria SEC is adopting a three-pronged approach to handling digital assets. In a move similar to the position held by the U.S. SEC, Nigeria’s security regulator argued that virtual assets constitute securities unless proven otherwise.
For the SEC, issuers or sponsors of digital tokens need to convince the Commission that their offerings do not constitute a security and are, in fact, utility “coins.” According to the SEC, the determination of whether a crypto is a security or a utility will involve an initial assessment phase and a final registration if deemed to be the former.
Commenting on the market participants that fall under the purview of the Commission, the SEC’s statement reads:
“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.”
The proposed crypto regulations being developed by the Nigeria SEC also include protocols for token sales. Foreign-based issuers looking to do a coin offering in the country may need to establish a local presence in Nigeria.
Growing Bitcoin Utilization in Nigeria
The Nigeria SEC’s plan to regulate cryptocurrencies may put an end to years of uncertainty regarding the legality of cryptos in the country. Despite this lack of legal clarity, the novel tech has seen significant adoption in Nigeria.
As previously reported by BTCManager, forward-thinking business people in the country are scaling the forex scarcity hurdle via Bitcoin (BTC). By utilizing BTC payment corridors, several small and medium-scale enterprises can trade with international partners.
Back in July, the Speaker of the House of Representatives, Nigeria’s lower parliament, commented on the importance of adopting crypto and blockchain technology. According to data from Google Trends, Nigeria accounts for the highest Bitcoin search volume in the world.