Nigeria SEC Proposes New Digital Asset Rules

Nigeria is working on new industry laws for digital asset platforms, making it one of the world’s most crypto-curious countries.

According to a Bloomberg story from May 1, the Nigerian Securities and Exchange Commission (SEC) is considering enabling licensed digital exchanges to list tokens backed by specific assets.

The head of the Nigerian SEC’s securities and investment division, Abdulkadir Abbas, has stated that the commission will only permit listings of tokens backed by equity, debt, or property. Abbas reportedly claimed that cryptocurrencies like Bitcoin and Ether will not be included.

The Securities and Exchange Commission of Nigeria intends to authorize fintech businesses to function as digital sub-brokers, crowdfunding intermediaries, fund managers, and issuers of tokenized coins. The authority will only register cryptocurrency exchanges once the central bank issues clear regulations for the cryptocurrency market.

Abbas said those seeking licenses would have to wait one year for “regulatory incubation,” during which the SEC would examine how they would operate and provide services in the country. Additionally, he said:

“By the 10th month, we should be able to make a determination whether to register the firm, extend the incubation period or even ask the firm to stop operation.”

As was previously reported, in early 2021, the Central Bank of Nigeria prohibited local banks from providing services to platforms relating to cryptocurrencies.

The regulator’s rationale for the prohibition was the extreme volatility and unpredictability of cryptocurrency markets like Bitcoin. The monetary authority threatened severe punishments for any financial institution or lender disregarding the order.

Despite the government’s efforts, Nigeria has become a leading nation in Bitcoin adoption and general interest in cryptocurrency.

Google Trends data shows that Nigeria has the second most interest in “Bitcoin,” behind only El Salvador, which will officially recognize Bitcoin as legal cash in 2021. Slovenia, the Netherlands, and Switzerland are the top five crypto-curious countries.