Nigeria’s SEC classifies cryptocurrencies as securities

The Nigerian Securities and Exchange Commission (SEC) published new rules regulating cryptocurrencies, classifying them as securities.

According to the 54-page document, digital assets are akin to equity or a debt obligation of the issuer.

“[…] thus, [cryptocurrencies] are by default under the SEC’s purview,” the regulator stressed.

The rules also include requirements for registration of trading platforms. In particular, exchanges must have a minimum paid-up capital of 500,000,000 naira ($1.2 million at the time of writing).

Registered platforms must provide the regulator with a list of assets and obtain for each one approval. The SEC urges exchanges to adhere to a “fair, reasonable and transparent” policy regarding fees.

In 2020 the deemed crypto assets to be securities with the caveat ‘unless proven otherwise’. This left issuers the right to demonstrate that a given asset did not fall under its jurisdiction.

In a comment to Bloomberg, Luno regional head Owen Odia said the new rules could serve as “a precursor to an unexpected move by the central bank, which would alter its approach, creating a critically important foundation for mass adoption of cryptocurrencies across the country.”

In February 2021 the banned commercial banks from providing services to crypto exchanges and companies dealing with digital assets.

Later the Senate proposed the central bank regulate the sector rather than restrict it.

In March the regulator stated that it did not ban local residents from buying and selling Bitcoin, and the restrictions affected only financial institutions. On this backdrop, the volume of P2P operations in the country rose by 27%.

In August The Guardian reported on growing popularity of cryptocurrencies in Nigeria, despite restrictive measures by authorities.

Back in 2021 the average number of monthly crypto transactions in Africa rose by 1,386.7%, according to KuCoin analysts.

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