Nigeria's SEC classifies cryptos as securities

With the latest regulations, the country is trying to promote the adoption of cryptocurrencies instead of banning them outright

By Shashank Bhardwaj

Image: Shutterstock

The Securities and Exchange Commission of Nigeria has issued new rules to govern the issuance, custody, and exchange of digital assets, as well as classify them as securities.

The "New Rules on Issuance, Offering Platforms, and Custody of Digital Assets" is a 54-page document establishing registration requirements for digital asset offerings and custodians. This latest regulation comes 20 months after the Commission first stated how it would classify and regulate digital assets in a statement it had issued.

Entities wishing to provide crypto services or products in the country must get a virtual assets service provider (VASP) license, according to the new rules. This is in addition to any applicable category licenses. The VASP license has its own set of requirements. License holders, in particular, must collect self-declared risk acknowledgment papers from users, as well as a disclaimer that any protection fund does not cover investment losses. VASPs must also follow anti-money laundering (AML) guidelines.

Exchanges are also required to submit trading information on a weekly and monthly basis, as well as financial and compliance reports quarterly and annually. It's also worth noting that an exchange cannot allow the trade of any digital asset unless the Securities and Exchange Commission (SEC) has first issued a "no objection" to the asset. Exchanges must also submit applications for each item it wishes to list. The application must demonstrate that the exchange has sufficient knowledge of the project and its risks.

Initial coin offerings and token issues are also covered by the SEC. Companies doing business in Nigeria or providing services to Nigerians must first declare their intention to issue a token. Most of the recent guidelines are fairly extensive, covering the majority of the main issues necessary for crypto regulations.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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