A new rulebook published over the weekend by the Nigerian officials describes a digital asset as a token that represents assets such as a debt or equity claim on the issuer, and thus by default is under the purview of the Securities and Exchange Commission of Nigeria.
The rules may help boost trading by giving more clarity on the sector in a country that already ranks as among the biggest markets for digital assets. Nigeria accounts for the largest volume of cryptocurrency transactions outside the U.S., according to Paxful, a Bitcoin marketplace.
- The Nigerian SEC’s “New Rules on Issuance, Offering Platforms and Custody of Digital Assets” circular looks to give regulatory clarity to the booming market, which is growing dramatically year on year in a nation of tech savvy people.
- Exchanges registered in-country need to be capitalized with at least NGN 500,000 (US$1,204) in paid-up capital, and post a fidelity bond for at least 25% of this amount, according to the rules.
- The Nigerian SEC also requires exchanges to be “fair, reasonable, and transparent” with their fees.
- Registered exchanges will also need to provide the SEC with a list of assets they intend to trade and get a “no objection” letter for each asset.
- In September, Nigeria’s SEC said it had established a specialized division to study crypto investments.
The regulations “could act as the precursor for a surprise move from the central bank to reverse its approach, providing critical foundations for mass crypto adoption across the country,” said Owen Odia, country manager for Nigeria at cryptocurrency exchange Luno.
The new rules cover the issuance of digital assets as securities, the registration of platforms and digital asset custodians, exchanges and virtual assets service providers.
Approximately 33.4 million Nigerians, which accounts for 35% of the population aged 18 to 60, own or have traded cryptocurrencies. They tend to rely on crypto due to devaluation of the Naira, Nigeria’s currency.