Nigeria's SEC issued new guidance for Crypto classifies them as securities
New rules got released by the Securities and Exchange Commission of Nigeria. It is for guiding the issuance, and custody. It also includes the exchange of digital assets and classifying them as securities. Entities offering cryptocurrency services or products here need to fulfill some criteria. They must have a virtual asset service provider license. They may too need other licenses based on the industry they are operating in or the category they belong to. These rules apply to every platform. Generally those supporting Receive Bitcoin, exchange, and virtual assets transfer. Also every issuer and sponsor of virtual assets such as international and non-residential issuers and sponsors, and any operator aggressively targeting investors in Nigeria.
Major definitions
• SEC has defined “digital assets” as a digital token representing assets like debt or any equity claim on the issuer.
• They also defined Securities Token Offering as any offering and digital token sales that are considered securities.
• SEC defined the digital assets offering or DAO platform as one electronic platform that is controlled by an operator of DAO hosting a DAO.
• A digital asset custodian is usually defined as any business providing safekeeping, holding, storage, or maintenance of digital assets for another person’s account. Anyone can trade and earn in cryptocurrencies with Bitcoin smart
All about the new license
• The new license comes with many obligations.
• They are employing anti-money laundering, combating financing terrorism standards, disclaimers, and the need for users to sign one risk acknowledgment form before they use it.
• Such rules also need exchanges to provide services to the citizens for securing a permit. The exchanges too need to provide a regular report regarding their trading and submit periodic reports of compliance.
• Exchanges too require the permission of the SEC for listing an asset. Thus they will need to apply for the listing.
• Also, the Commission should not have any objection to these assets.
• The SEC too provided for initial coin offerings and token issuance generally.
• Companies that operated in the country or service Nigerians will require first to register their intention of issuing a token.
• After that, it is up to the Commission if they will issue approval or not.
• For any token deemed as a security, the issuer must too follow the laws of securities.
• The rules look very comprehensive and cover most of the necessary basic issues for cryptocurrency regulations.
• After the digital asset has been determined as a security by SEC, the issuer must apply for registration.
• The document of registration will have tokens’ names, ticker, amount, price, and total token numbers.
• They too require providing the opinions of solicitors and disclosures of corporate governance.
• There must be an escrow agreement with any independent Trustee or Custodian registered with the Commission.
• It was also stated by the SEC regulation that the maximum amount any retail investor can invest in the offering of the digital asset.
• For any qualified institutional or investors with high net worth, there is no such restriction on the amount of investment.
• In the case of retail investors, N200000 each issuer is the maximum with an overall limit of investment not being more than N2 million within 12 months.
The central bank put a ban on banks to carry on crypto transactions
• It is completely opposite to the directives of Nigeria’s Central Bank on crypto that banned all commercial banks there to facilitate transactions that are crypto-related.
• This lead to the rise of peer-peer trading among all citizens.
• The ban stifled cryptocurrency innovations.
• It never stopped its adoption.
• Nigeria became one of the top countries for use of crypto due to the country’s poor economic state.
• Such new rules may finally add some legitimacy or order to this crypto industry.
• These rules may also be guiding the CBN to provide a framework for how the banks will interact with cryptocurrency.
• Recently, it was revealed by Apex bank that it is about to upgrade CBDC’s use cases for including the options of bill payment.
Conclusion
For DAOPs interest to operate in the market, SEC needs that they file and pay a N100k application fee. Also an N300k processing fee, and an N30 million registration fee. N100k sponsored individual fee is also there. They will need to have a least paid-up capital of N500million. They will need to provide a current Fidelity Bond. It will cover 25% of any least paid-up capital. This is as per the Rules and Regulations of the Commission stipulated.
