FG Issues New Cryto Rules

The Securities and Exchange Commission (SEC) has released a set of new regulations guiding the issuance, exchange and custody of digital assets in Nigeria.

According to SEC, a digital asset means a digital token that represents assets such as a debt or equity claim on the issuer. 

In 2020, the Central Bank of Nigeria (CBN) directed financial service providers to halt cryptocurrency transactions.

crypto rules in Nigeria

But, in its new regulations, SEC said mandates the registration of “the offering and sale of digital tokens that are considered securities”. This signifies that Nigeria is attempting to balance outright prohibition and unregulated use of crypto-assets.

The new rule shall apply to all platforms that facilitate the trading, exchange, and transfer of virtual assets, all issuers and sponsors of virtual/digital assets, including international and non-resident issuers and sponsors, and any operator that aggressively targets Nigerian investors.

“The commission may reject any application for registration of digital assets if, in its opinion, the proposed activity infringes public policy, is injurious to investors or violates any of the laws, rules and regulations implemented by the commission,” the regulator added. 

The regulation provides that issuers may only raise funds within a limit of N10 billion. It, however, added that it could adjust the ceiling from time to time.

According to the regulation, SEC said it would accommodate digital assets offering platform (DAOP) — an electronic platform operated by a DAOP operator for offering digital assets — provided it tendered evidence of a minimum paid-up capital of N500 million and a current fidelity bond covering at least 25 per cent of the minimum paid-up capital.

The regulation requires applicants seeking to register a DAOP to pay N100,000 for the filing or application fee, N300,000 for the processing fee, N30 million for the registration fee, and N100,000 for sponsored individuals. 

SEC’s new rules could help provide the needed regulatory lucidity for the scope of a digital asset or security. 

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