The Nigerian Securities Exchange Commission has published new rules regarding the issuance, clearing and custody of digital assets in the country.
The Nigerian Securities Exchange Commission issued a statement over the past years on how it will classify and treat digital assets. Now, the Commission is issuing new rules for cryptoassets.
It was stated that this development could bring legitimacy to crypto and related businesses and open new doors for the use of crypto in Nigeria, one of the leading countries in crypto adoption.
Nigeria’s New Crypto Rules
The Central Bank of Nigeria (CBN) has published new rules in light of the SEC’s published rules regarding digital assets.
Organizations in Nigeria wishing to offer any type of crypto products and services to Nigerians must obtain a virtual asset service provider (VASP) license.
VASP license comes with its own obligations. In particular, while the licensees receive risk notification forms declared by themselves from the users, they issue a disclaimer stating that the losses arising from investments are not covered by any hedge fund.
In addition to the VASP rules, the document released by the Commission on 13 May covers the following areas:
- Operating a digital asset exchange
- Token issuance
- Digital operating an asset platform
- Requirements for digital asset custodians
About the Operation of a Digital Asset Exchange
According to the SEC’s rules, all crypto exchanges serving Nigerians now need permission required, which gives the Commission access to its records. Exchanges are expected to provide weekly and monthly trading information, as well as quarterly and annual financial and compliance reports.
An exchange will also need to submit an application for each asset it wishes to list. The application must prove that the exchange has sufficient knowledge of the project and the risks involved. Moreover, exchanges are also required to perform real-time market surveillance.
About Token Issuance
Those who wish to make digital asset offerings in Nigeria or submit any project targeting Nigerians must register their intention with the SEC by completing an evaluation form and submitting a detailed copy of its whitepaper. If the commission accepts the proposed token as a security, it must comply with the securities laws of the issuing country.
Additionally, the SEC will allow projects to rise up to NGN 10 billion, which is approximately $24.1 million at the official exchange rate. The Commission may update this figure as it deems appropriate.
About the Operation of the Digital Asset Platform
The digital asset offering platform (DAOP) refers to the portals through which issuers can initiate a digital asset offering, such as an ICO. The Commission has drawn up a list of obligations for the operation of a DAOP.
About Digital Asset Custody
There are also provisions for running a digital asset custodian business in Nigeria, According to the Rules, a DAOP can provide its own custodian services provided it complies with the relevant regulations.
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