In Landmark Move, SEC Recognises Cryptocurrencies, Sets To Regulate Them

The Securities and Exchange Commission (SEC) has said that it would henceforth regulate crypto-token or crypto-coin investments, while classifying them as securities.

In a statement posted on its website, SEC said that Section 13 of the Investment and Securities Act, 2007 bestowed powers on it as the apex regulator of the Nigerian capital market to regulate investments and securities business in the country.

“The position of the Commission is that virtual crypto assets are securities, unless proven otherwise. Thus, the burden of proving that the crypto assets proposed to be offered are not securities and therefore not under the jurisdiction of the SEC, is placed on the issuer or sponsor of the said assets.

“Issuers or sponsors are expected to satisfy the burden of proving that the virtual assets do not constitute securities by making an initial assessment filing. However, where the finding of the Commission is that the virtual assets are indeed securities (not structured to be exclusively offered through crowdfunding portals or other exempt methods), then the issuer or sponsor must register the digital assets,” the statement said.

The capital market regulator disclosed that the virtual asset registration process would adopt a two-pronged approach namely: an initial assessment filing to satisfy the burden of proof and a filing for registration, either made directly by the issuer or sponsor where the burden of proof is not satisfied.

“All Digital Assets Token Offering (DATOs), Initial Coin Offerings (ICOs), Security Token ICOs and other Blockchain-based offers of digital assets within Nigeria or by Nigerian issuers or sponsors or foreign issuers targeting Nigerian investors, shall be subject to the regulation of the Commission.

“Existing digital assets offerings prior to the implementation of the Regulatory Guidelines will have three (3) months to either submit the initial assessment filing or documents for registration proper, as the case may be,” SEC said.

Those who qualify to be regulated include any person (individual or corporate) whose activities have to do with Blockchain-related and virtual digital asset services as well as issuers or sponsors of virtual digital assets.

Foreign issuers or sponsors will be recognised by SEC where a mutual agreement exists between Nigeria and the country of the foreign issuer or sponsor.

“A recognition status will also be accorded, where the country of the foreign issuer or sponsor is a member of the International Organization of Securities Commissions.”

Source: Ripples Nigeria.