The Securities and Exchange Commission (SEC) of Nigeria has designated crypto property as securities as the authorities step up efforts to control Africa’s largest cryptocurrency market. The SEC says the classification of crypto property for regulation is according to the nation’s funding and securities legal guidelines of 2007.
In a statement launched Sept. 14, the SEC directs that corporates and people “whose activities involve any aspect of blockchain-related and virtual digital asset services, must be registered.”
While the classification is seemingly concentrating on new crypto property, the SEC says that “existing digital assets offerings prior to the implementation of the regulatory guidelines will have three (3) months to either submit the initial assessment filing or documents for registration proper, as the case may be.”
Furthermore, overseas issuers of crypto property are anticipated to adjust to rules that will require them “to establish a branch office within Nigeria.”
Reacting to the announcement, the General Secretary of the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), Senator Iyere Ihenyen, commends the regulator for striving to “treat digital assets as alternative investment opportunities.”
Ihenyen says the classification means “investment or security-based digital assets offerings are caught here, whether it is the now dead or dying initial coin offerings (ICOs) that got many fingers burnt in 2017 or the security token offering (STO) that didn’t live up to expectations.”
Still, the SIBAN common secretary feels the SEC “should have clearly defined its test for what constitutes investment or security, rather than vaguely state that virtual crypto assets are securities unless proven otherwise.”
Ihenyen explains why he has reservations about this strategy:
“The approach the SEC has taken may be problematic, not only for players and investors in the Nigerian market but also for everyone, including the courts and the regulator itself. More so, the burden of proving otherwise is placed on the issuer, a thing that could be easily abused by regulators and even law enforcement agencies.”
Instead, the SEC ought to have revealed a well-defined take a look at for figuring out what constitutes a safety or funding. Ihenyen says doing “this will save us all a lot of time, energy, and resources.”
Meanwhile, Chiagozie Iwu, the CEO of an area cryptocurrency alternate, Naijacrypto, says the SEC’s classification of crypto property reveals some degree of recognition for digital property by the regulator. However, he’s fast to level out that the assertion doesn’t particularly handle the legality or illegality of crypto property.
The SEC rules don’t say something about cryptocurrency exchanges and this, based on Iwu, means the SEC has “no classification for crypto exchange businesses yet.” Still, Iwu believes a extra complete report can be issued by the regulator shortly.
Meanwhile, Nathaniel Luz, a consultant for Dash in Nigeria, says in accordance with the SEC’s classification, cryptocurrencies like “Dash falls under the ‘crypto asset – non-fiat virtual currency’ grouping.” This means this digital forex can’t be “classified as a commodity or security plus the existence of dash since 2014 pre-dates the ICO days.”
Still, Luz says his group “is open to working with the regulators should they require any clarifications regarding the classification of dash.”
In the meantime, the SEC’s classification comes at a time when the usage of cryptocurrencies for worldwide commerce continues to develop within the nation. Nigerians additionally use cryptocurrencies for sending remittances and for on-line funds. However, Iwu believes the transfer by the regulator is the end result of a two-year effort to create a construction for cryptocurrencies. It is unrelated to the present overseas forex disaster.
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