Nigeria Securities and Exchange Commission (SEC) declared on Monday that it would begin to control digital assets and firms with cryptos at its core.

The Commission’s release stated that the aim of the regulation isn’t to stop tech advances and innovative solutions but to push for standards that have ethical practice at its heart – this will, in the end, establish an effective marketplace.

Policymakers of Nigeria said before that such digital assets are not legal and cautioned people from using them.

The cryptocurrency investment space in the country, therefore, didn’t see regulation, even with a climb in the interest people shown in these digital investments.

The 2020 Global Crypto Adoption Index showed that the nation was actually high up in standards of crypto use and acceptance. The list is made by the digital leverage data analytics company, Chainalysis.

Nigeria found itself on the list, with the States, China, Russia, Kenya, and other nations ranked high by crypto-acceptance.

The capital marketplace and investment regulator stated that such digital investments offer alternative chances for investing and are thus significant. That means, according to the SEC, that they need to run in a way that protects investors, the public, marketplace standing – in short, transparency is highly valued and important.

Section 13 of the Investment and Securities Act, 2007 transferred authority to the Commission as the nation’s capital marketplace to oversee investing and security businesses there.

Along with this, the Commission stated that they now have a 3-step aim of regulating innovation, with a focus on security, deepening the marketplace, and offering solutions to issues. They believe this will serve as guidance for the strategy, its guidelines, and interactions with those who wish for lawful behavior and innovative solutions. Moreover, the Commission said it would be overseeing crypto-coin investing and cryptocurrency token investments when the investments are rendered security transfer.

What to Regulate

The Commission stated that their stance is that digital cryptocurrency assets are securities unless stated otherwise. Thus, the task of providing proof that cryptocurrency assets offered proposed to be on offer aren’t securities and hence aren’t under the Commission’s authority is put on the person issuing or sponsoring the assets.

Those who issue or sponsor them need to fulfill the needed checklist of proofs that the digital assets aren’t securities by rendering it an unavoidable assessment filling. But, when the SEC finds certain digital assets as securities (not made to be just provided via crowdfunding portals or other similar ways), then the person issuing or sponsoring them has to register the digital asset.

The procedure of registration for digital assets is going to thus have a 2-phase method – the first assessment form to fulfill the checklist of proof and filing for registration the right way, done straight by the issuer or sponsor or where the need for proof is not fulfilled.

Similar to this, the Commission confirmed that Digital Assets Token Offerings (DATOs), ICOs, Protection Token ICOs, and the rest of digital-leverage-founded virtual assets in the country or by those issuing them or sponsoring them from Nigeria, or by those from abroad issuing them and aiming for investors from Nigeria, will be subjected to being overseen by the SEC.

The virtual asset offerings in place before implementing Regulatory Guidelines will get 3 months to submit the first assessment filing or the docs for registration.

The SEC stated that those to be subjected to regulation count in any individual or corporate whose activities include some part of distributed-leverage-related and virtual asset services have to be registered by the SEC and, thus, are going to be subjected to the regulatory rules. Those services include but aren’t restricted to the reception, transfer, and execution of orders in the name of another person, traders on accounts, portfolio handling, investment tips, custodian, or nominee aid.

The rest are those issuing or sponsoring (start-ups or businesses already in place) digital assets that are regulated by the SEC’s regulations.

The Commission stated that it might ask foreign or non-resident issuers or sponsors to create a Nigerian office, but that foreign issuers or sponsors would be accepted by the SEC if there is a mutual arrangement between the Nigerian government and the nation of the foreign issuer or sponsor.

Acknowledgment status will be provided, too, where the nation of the foreign issuer or sponsor is part of the International Organization of Securities Commissions.

The SEC also said that that “Crypto Asset” defines a digital representation of worth that can be traded virtually and acts as a medium of exchange; and/or a unit of account; and/or a store of worth, but has no legal tender status in any area. A Cryptocurrency Asset is – not provided nor warranted by any authority, and complies with the mentioned criteria just by agreement in the Cryptocurrency Asset community, and is not the same as Fiat Currencies and E-money.