Cryptocurrencies have now been recognized as securities in Nigeria by the Securities and Exchange Commission (SEC). In an announcement on Monday, September 14, 2020, the regulatory institution of Nigeria issued proposed regulations for cryptocurrency. Nigerian SEC thus has brought digital currencies under its jurisdiction.
Cryptocurrency regulation in Nigeria
A regulatory framework has been released by the Securities and Exchange Commission of Nigeria for cryptocurrency. The framework consists of certain regulatory guidelines of digital currencies. The basic purpose behind releasing regulations for the cryptocurrency is to ensure transparency and efficiency in the cryptocurrency market. For regulating the cryptocurrency sector, the commission applied the three-prolonged approach.
“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 general objective of regulation is not to hinder technology or stifle innovation, but to create standards that encourage ethical practices that ultimately make for a fair and efficient market.”
As per the official announcement of SEC, digital assets are now viewed as securities in the country. For proving that the digital assets are securities, the issuer or sponsor will have to make an initial assessment filing. If issuers or sponsors fail to satisfy the Securities and Exchange Commission then they will be required to register their crypto assets.
As the official announcement post reads:
“Issuers or sponsors are expected to satisfy the burden of proving that the virtual assets do not constitute securities by making an initial assessment filing. However, where the finding of the Commission is that the virtual assets are indeed securities (not structured to be exclusively offered through crowdfunding portals or other exempt methods), then the issuer or sponsor must register the digital assets.”
The commission has described a two-prong approach for the registration of digital currencies. The first step is the initial assessment filing which will be made for the satisfaction of the ‘burden of proof’ while the second step is to file an application for registration.