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Nigeria SEC Confirms It Has Oversight Functions Over The Crypto Market, Sets New Rules

Meta description. Over the weekend, Nigeria’s financial watchdog, the Nigeria securities and exchange commission (SEC) issued a press release, including the introduction of new crypto policies, regarding the state of the crypto market in the country.

Part of the statement revealed that the financial regulator can and would start performing oversight functions over the crypto space since the space falls under its horizon based on the definition of digital assets.

Nigeria’s SEC Releases New Policies Regarding Crypto Regulation And Use

According to Nigeria’s SEC, “a cryptocurrency is a digital token the holder can use to indicate an equity or a debt instrument.” The financial regulator further released new rules which clarify crypto offerings, issuance of virtual tokens, and custodian platforms.

The SEC reiterated that the new rules are “binding on all issuers who use crypto offerings to raise capital for their investments.” Also, the SEC stated that crypto exchanges now need operational licenses which they can obtain from the agency. However, the exchanges must be ready to abide by certain terms before they can receive their operational license.

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For instance, they must have a risk and disaster management plan, all their customers must comply with the KYC policy and the exchanges must provide full details of virtual assets listed on their platform.

Furthermore, the exchanges must furnish the SEC with their security infrastructures such as escrow details with their custodian, including technical support and other security frameworks they’ve put in place.

The SEC also stated that no Nigerian crypto exchange must issue or transfer digital assets unless they have the requisite licenses and permits. Part of the 54-page report makes it compulsory for the exchanges to have a minimum of 25% fidelity bond and at least 500,000 naira (about $1,204) in paid-up capital.   

New Token Listing Terms For Nigeria Crypto Exchanges

The SEC added that exchanges would need a “no objection letter” from it before it can list any new digital token. Furthermore, the SEC also stated the minimum investment capital for ICOs (initial coin offerings).

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While the SEC stated that 200,000 naira and a total annual investment of 2M naira per issuer is the limit investment amount for retail investors, it was mute regarding the limits for institutional and high-net-worth individuals.

As one of the most populated nations in Africa, Nigerians (especially the youths) have taken to crypto adoption massively as it is happening in most other developed economies. Hence, it is no surprise that the nation’s financial watchdog is making moves to ensure that the crypto sector in the nation is well-regulated.

A Clash With A Previous Policy

The new guidelines released by Nigeria’s SEC contradict the crypto policy issued by Nigeria’s central bank (CBN). The nation’s apex bank outright banned all crypto-related transactions, resulting in a rising number of P2P transactions.

Perhaps, the nation’s SEC is taking this new step, given that the apex bank’s actions didn’t stop or reduced the massive adoption of cryptos among Nigerians even if it stifled crypto innovations. However, the CBN is yet to comment on the new rules issued by the SEC.

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Shelly Melancon (Switzerland)

Shelly is a cryptocurrency enthusiast from Switzerland, she bought her first crypto in 2015 when it was way less popular then it is today and since 2017 she has been writing about cryptocurrency for online news portals. Shelly is the newest addition to the Tokenhell team, she writes mostly news and reviews related articles , stay tuned to her posts to stay up to date with the crypto world.

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