A document issued yesterday by the SEC of the State of Nigeria, the most populous country in Africa, outlines new rules on cryptocurrencies, stating that they are all securities and will have to be regulated accordingly.
It will be up to the issuer to prove that a crypto is not security by filling in a special form that will be checked by the SEC.
The same applies to DATOs (Digital Assets Token Offerings) and ICOs (Initial Coin Offerings) which will operate in Nigeria or which are addressed to Nigerians. These must be registered and subject to the rules of the Nigerian SEC, submitting the documents within 3 months.
This document defines the laws to regulate crypto assets and the entities that operate with them, since also the exchange platforms that offer cryptocurrencies and therefore securities, must obtain a license from the SEC in order to operate.
In essence, we are not only talking about tokens created for different purposes such as those for ICOs, but also about all the crypto assets linked to a blockchain, such as Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC).
Will Nigeria hold back the crypto sector?
Certainly, this is a step forward in crypto regulation, but unfortunately, the country has chosen a way to make the sector complicated and in fact this will lead many companies to close or relocate.
Nigeria’s choice therefore seems to have been dictated by the desire to limit the use of crypto, in part to stop the proliferation of scams. The problem is that doing so limits the development of the sector and not just illegitimate projects, as it usually takes time and money to obtain a license.
Much has been discussed in recent years about crypto regulation. Many people in the sector have said that the lack of regulation led to a lack of clarity and therefore stagnation, especially as far as the institutions are concerned. But, on the other hand, it is also true that regulation like this in Nigeria hinders the crypto ecosystem.