Securities and Exchange Commission of Nigeria has defined digital assets in new statements under its regulatory umbrella.
It has been reported that the Nigerian SEC defined tokens and coins in the country’s financial markets. The commission stated that these digital assets, which provide “alternative investment opportunities”, would be classified into four different categories for regulatory oversight.
However, the SEC said:
“Virtual crypto assets are securities, unless proven otherwise. The burden of proving that the crypto assets proposed to be offered are not securities and therefore not under the jurisdiction of the SEC, is placed on the issuer or sponsor of the said assets.”
According to the report, Nigerian regulators will register and approve all digital assets, treating cryptocurrencies and utility tokens as commodities, as the SEC stated that it would not be responsible for overseeing utility token spot trading and transactions. The regulatory body said it would view security tokens as securities, and derivatives and investment funds as “specified investments.”
The report added:
“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.”
Blockchain and crypto firms releasing Digital Assets Token Offerings (DATOs), Initial Coin Offerings (ICOs), and Security Token Offerings (STOs), operating in Nigeria prior to the implementation of these new regulations will have three months to register with the SEC.
Likewise, public statements from the Nigerian SEC regarding crypto and virtual currencies are rare.
In early 2017, the commission warned citizens to apply caution in their approach towards investing in cryptocurrencies as they might experience “financial losses” without guaranteed protection from the regulatory body.
Thus, interest in crypto from its citizens may be driving Nigerian regulators to quickly rein in this budding market.