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Nigeria’s SEC starts regulating its cryptocurrency industry

Firms engaged in ICOs, as well as those offering crypto and blockchain-related services, are now required to register with Nigeria's SEC.

Abuja, Nigera Image by: Wikipedia Commons

Wed, 16 Sep 2020, 05:05 am UTC

Nigeria is among the top countries with the highest increase in cryptocurrency usage. Recently, the country’s Securities and Exchange Commission revealed plans to regulate the crypto industry to protect investors and ensure transaction transparency.

In a statement released on Monday, September 14, 2020, Nigeria’s Securities and Exchange Commission (SEC) announced that it will start regulating cryptocurrencies and firms engaged in crypto-related businesses, according to PremiumTimes. The move is aimed at creating standards that promote ethical practices within the industry as well as protecting the interest of investors.

Specifically, the Commission will oversee all Initial Coin Offerings (ICO), Digital Assets Token Offerings (DATO), blockchain-based offers, and Security Token ICOs within Nigeria, regardless of whether they are issued by locals or foreign parties, Techpoint.africa reported. However, the regulatory agency assured that the regulation won’t stifle regulation and hinder technological progress but to create a fair and efficient cryptocurrency market.

The SEC said that it will regulate crypto-token or crypto-coin investments “when the character of the investments qualifies as securities transactions,” Bloomberg reported. The statement also revealed that the regulator will take a three-pronged approach to regulate the industry, which includes market deepening and providing solutions to problems.

Those who plan to issue or sponsor the issuance of their own cryptocurrency will be required to register with the SEC. Meanwhile, those who have already issued their token as well those have already engaged in ICO are still given three months to comply with the new requirements.

Blockchain-related businesses as well as firms offering crypto-related services are required to register with the SEC as well. “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,” the regulatory agency noted.

SEC’s decision to regulate its crypto industry is well-time as the country is experiencing a surge in digital currency adoption lately. Nigeria, along with Peru India, Indonesia, was recently named as the top countries with the highest increase in wallet creation and usage.

“Nigeria has been the most trending country in recent months,” a recent report from Blockchain.com noted. “It has increased by 60% its usage of Blockchain.com web wallet since April 2020.”

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