Nigeria’s Securities and Exchange Commission has announced that it will create a clear regulatory framework for trade in digital currencies to protect investors’ interests and to ensure transparent transactions.
On Monday Sept.14, Nigeria’s capital market and investment regulator said that the cryptocurrency regulation’s aim is not to stifle innovation or hinder technology, but rather to create standards that promote ethical practices.
In the past, the authorities in Nigeria had refused to recognize cryptocurrencies as legal tender. In 2018, the Central Bank of Nigeria warned that cryptocurrencies, including Bitcoin, Onecoin, Litecoin, Ripple, Dogecoin, and Monero, were not regarded as money. The Nigerian Central Bank also stated that investors were unprotected.
The Commission Strengthens Crypto-Assets Regulations
In today’s announcement, the SEC said that it would consider crypto-coin or crypto-token investments as exchangeable securities. Every crypto asset in the country will be treated as securities unless the startup or company proves otherwise. If the regulator determines that a virtual asset is not a security, then it will not regulate it.
The agency will be taking a three-pronged approach to regulating innovation within the crypto sector. These include safety, market deepening, and offering solutions to problems.
As per the regulator, crypto sponsors or issuers will be required to register their virtual digital assets with the commission.
First, crypto sponsors or issuers are expected to make an initial assessment filing to the agency to prove that the assets they offer are securities. They will then be required to do a proper filling for registration purposes.
Those that have already engaged in ICOs or issued assets will be given three months to comply with the specified registration requirements.
Furthermore, every person or corporate organization engaging in any aspects of digital assets and blockchain-related services must register with the commission and follow its regulatory guidelines.
This appears to apply to crypto-based startups, crypto exchanges, and individuals operating their own exchange services in Nigeria. However, the agency mentioned that it would require non-resident or foreign companies or startups to establish a branch in the country.
Foreign firms will be recognized if they belong to a nation that either has a reciprocity agreement with Nigeria or is a member of the IOSCO (International Organization of Securities Commission).
Crypto Markets Thrive with Clear Regulation
The crypto scene is booming, but it needs a clearer regulatory framework for it to thrive. The world has witnessed a huge rise in blockchain and crypto investments. Lack of clear regulation is one of the main roadblocks that restrict the growth of the industry. Many countries across the world still don’t have a proper approach to regulating cryptocurrencies. Several crypto activities, including ICOs, are in a grey area because there is no actual regulation on cryptocurrency.
Regulators have a role to play in putting in place a clear policy to protect customers from financial fraud. Once regulators have a clear definition of what crypto assets are, then they can determine how to regulate ICOs and other crypto-related activities.
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