FG makes U-turn on cryptocurrency ban, as SEC issues new guidelines for holders


Federal Government, through the Securities and Exchange Commission (SEC), has released new regulations guiding the issuance, exchange and custody of digital assets in Nigeria.

Minister of Finance, Zainab Ahmed

It would be recalled that in the aftermath of the October 2020 EndSARS protests across the cou7ntry, the Federal Government, through the Central Bank of Nigeria (CBN) had placed a ban on transaction in cryptocurrencies by financial institutions with individuals and companies in the country, as it then claimed that organisers of the agitations by youths had relied on the digital currencies to fund their activities.

Subsequently, the government established the eNaira digital currency regime to fill the void created by the ban on crytocurrency usage.

CBN had then directed financial service providers to halt cryptocurrency transactions. However, in its latest regulations issued, Monday, SEC mandated the registration of ‘the offering and sale of digital tokens that are considered securities.’

The new regulations, among others, provide that issuers may only raise funds within a limit of N10 billion.

The development is coming more than a year after the commission issued the classification and treatment of digital assets.

According to SEC, a digital asset means a digital token that represents assets such as a debt or equity claim on the issuer.

It added that the rules shall apply to all issuers seeking to raise capital through digital asset offerings.

According to the regulation, digital asset actors include digital asset offering platforms (DAOPs), digital asset custodians (DACs), virtual assets service providers (VASPs), and digital assets exchange (DAX).

SEC said it would review applications within 30 days before determining whether the digital asset proposed to be offered constitutes a “security.”

“The commission may reject any application for registration of digital assets if, in its opinion, the proposed activity infringes public policy, is injurious to investors or violates any of the laws, rules and regulations implemented by the commission,” the regulator added.

The regulation provides that issuers may only raise funds within a limit of N10 billion.

It, however, added that it could adjust the ceiling from time to time.

The regulation requires applicants seeking to register a DAOP to pay N100,000 for the filing or application fee, N300,000 for the processing fee, N30 million for the registration fee, and N100,000 for sponsored individuals.

SEC’s new rules could help provide the needed regulatory lucidity for the scope of a digital asset or security.

The new rules was, however, silent on whether individuals and companies can use their cryptocurrencies as collateral for loans, and asset acquisition, as previously obtained.