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Time and time again, since the inception of cryptocurrency, there's been a tug of war between crypto enthusiasts and skeptics with little or no interest in blockchain and crypto investments.
Blockchain technology and crypto-asset adoption are now on the rise in various parts of the globe.
In a bid to ensure that digital assets operate in a way that is compatible with investor protection, the interest of the entire public, and not to jeopardize market integrity and transparent dealings, The Securities and Exchange Commission (SEC), has proposed a new set of rules that will regulate Crypto-token or Crypto-coin investments when the character of the investments qualifies as securities transactions.
What will be regulated
The stance of the Commission is that crypto-assets are securities unless proven otherwise. Therefore, the burden of proving that the crypto assets proposed to be offered are not securities, and therefore not under the jurisdiction of the SEC, is placed on the issuer or sponsor of the said assets.
Issuers or sponsors are expected to satisfy the burden of proving that the digital assets do not constitute securities, by making an initial assessment filing. However, where the finding of the Commission is that the virtual assets are indeed securities (not structured to be exclusively offered through crowdfunding portals or other exempt methods), then the issuer or sponsor must register the crypto assets.
The registration process for virtual assets will involve a two-pronged approach – an initial assessment filing to satisfy the burden of proof, and a filing for registration proper, either made directly by the issuer or sponsor, where the burden of proof is not satisfied.
Furthermore, all Digital Assets Token Offering (DATOs), Initial Coin Offerings (ICOs), Security Token (ICOs), and other Blockchain-based offers of digital assets within Nigeria, or by Nigerian issuers, sponsors, or foreign issuers targeting Nigerian investors, shall be subject to the regulation of the Commission.
Existing digital assets offerings prior to the implementation of the regulatory guidelines will have 12 weeks to submit the initial assessment filing of documents for registration proper, as the case may be.
Who will be regulated
Any individual or corporate entity whose activities involve any aspect of Blockchain-related and virtual digital asset services must be registered by the Commission and will be answerable to the regulatory guidelines. Such services include transmission, and execution of orders on behalf of other persons, dealers on own account, portfolio management, investment advice, custodian, or nominee services.
Issuers or sponsors of virtual digital assets shall be guided by the Commissions regulation. The Commission might demand Foreign or non-residential issuers or sponsors, to establish a branch office within Nigeria. However, foreign issuers or sponsors will be recognized by the Commission, where a mutual agreement exists between Nigeria and the country of the foreign issuer or sponsor.
A recognition status will also be accorded, where the country of the foreign issuer or sponsor is a member of the International Organization of Securities Commissions (IOSCO).
In light of this new development, crypto analyst believe would give a big boost to digital assets as mass adoption is in sight.
"SEC Nigeria has consistently shown that it has a clear understanding of her role in creating a conducive environment for the growth and development of Virtual Financial Assets, and Cryptocurrencies in general. This recent publication will act as a catalyst for mass adoption. It will also create the much needed institutional investor confidence for the Nigeria Capital Market," Chimezie Chuta, Founder, Blockchain Nigeria User Group, said.
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Mass Adoption Is Imminent As Nigeria’s SEC Set To Regulate Cryptocurrency Investments was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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