Forex Strapped Nigeria Designates Crypto Assets as Securities

Wednesday 16 September 2020, 8:26 AM AEST - 1 week ago

Forex Strapped Nigeria Designates Crypto Assets as Securities

The Securities and Exchange Commission (SEC) of Nigeria has designated crypto assets as securities as the authorities step up efforts to regulate Africas largest cryptocurrency market. The SEC says the classification of crypto assets for regulation is consistent with the countrys investment and securities laws of 2007.

In a statement released Sept. 14, the SEC directs that corporates and individuals whose activities involve any aspect of blockchain-related and virtual digital asset services, must be registered.

While the classification is seemingly targeting new crypto assets, the SEC says that 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.

Furthermore, foreign issuers of crypto assets are expected to comply with regulations that may require them to establish a branch office within Nigeria.

Reacting to the announcement, the General Secretary of the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), Senator Iyere Ihenyen, commends the regulator for striving to treat digital assets as alternative investment opportunities.

Ihenyen says the classification means investment or security-based digital assets offerings are caught here, whether it is the now dead or dying initial coin offerings (ICOs) that got many fingers burnt in 2017 or the security token offering (STO) that didnt live up to expectations.

Still, the SIBAN general secretary feels the SEC should have clearly defined its test for what constitutes investment or security, rather than vaguely state that virtual crypto assets are securities unless proven otherwise.

Ihenyen explains why he has reservations about this approach:

The approach the SEC has taken may be problematic, not only for players and investors in the Nigerian market but also for everyone, including the courts and the regulator itself. More so, the burden of proving otherwise is place ...

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