Nigeria SEC Releases Proposed Cryptocurrency Regulations

The Nigeria Securities and Exchange Commission (SEC) has released a proposed cryptocurrency regulation guideline while classifying crypto assets as securities.

Crypto Regulations Underway

According to an official release on Monday (September 14, 2020), the Nigeria SEC announced that the commission is looking at a three-pronged approach towards regulating the crypto industry. The SEC also stated that the aim of the proposed regulation was to promote market efficiency and transparency and not impede the nascent technology. 

Back in September 2019, the SEC set up a committee to develop a guideline that would see the inclusion of cryptocurrency and blockchain technology in the country’s capital market. The latest development signals a progressive step for the emerging industry. 

In the release, the Nigerian watchdog viewed crypto assets as securities unless the sponsors or issuers can come up with a proof of the contrary. According to the commission, the issuer or sponsor will go through an initial assessment step to prove that the crypto assets are securities. But if the SEC is not convinced, then the parties involved will have to register the crypto with the commission.

Also, foreign-based startups willing to conduct any activity in Nigeria will have to set up a local base in the country. The Nigeria securities regulator further provided a primer on the likely ambit of its cryptocurrency regulatory activities, stating:

“Any person, (individual or corporate) whose activities involve any aspect of Blockchain-related and virtual digital asset services, must be registered by the Commission and as such, will be subject to the regulatory guidelines. Such services include, but are not limited to reception, transmission, and execution of orders on behalf of other persons, dealers on own account, portfolio management, investment advice, custodian, or nominee services.”

Bitcoin Interest Continues to Grow in Nigeria

The proposed crypto regulation is the first of its kind in Nigeria and moves away from the previous negative sentiments expressed by the government. While crypto regulations are new in the country, there is a growing interest in Bitcoin and other cryptocurrencies among Nigerians.

In a report published in August, the platform witnessed a 60% increase in its web wallet since April. Data from Google Trends also places Nigeria as the number one country in terms of Bitcoin interest in the last 90 days.

As reported by CryptoPotato earlier in 2020, Bitcoin is receiving increased usage among Nigerians due to the country’s high poverty rate. Other factors that drive Bitcoin’s popularity include its use in cross border transactions and its emerging status as a store of value asset.