Nigeria’s SEC to avoid cryptocurrencies in digital asset push

SEC – Nigeria’s Securities and Exchange Commission through its General Director has disclosed it will only consider “Sensible digital assets” in its plan to push the adoption of digital assets in the country.

Lamido Yuguda told reporters in Lagos on Friday, November 25, 2022, that the commission’s reason for not considering crypto is given that crypto exchanges do not have access to the banking platform needed to drive their trades in Nigeria.

This is coming against the mass adoption of crypto assets in Nigeria- according to the chainalysis crypto adoption index 2021, Nigeria ranked 6th in global crypto adoption out of a sample of 154 countries.

The country didn’t make the top 10 in the 2023 rankings projection, data by Merchant Machine have shown that Nigeria will lead global crypto adoption by 2030.

While Nigerians seem to have a growing interest in crypto adoption, it still doesn’t make it safe for investments.

From high volatility to a lack of proper regulations, cryptocurrencies may appear as largely unsafe investment vehicles, although they possess high-risk levels than traditional assets.

According to Yuguda “The commission is in the business of protecting investors, not in the business of speculation.”

He however said that the commission might promote crypto as a digital asset if the market undergoes proper regulations.

The SEC has made significant efforts at regulating the crypto market, especially with the release of crypto guidelines earlier this year.

On May 13, 2022, the commission issued a guideline for all crypto and digital asset service providers.

These include; new license requirements for platforms that deal with digital assets, categorization of the platforms, as well as guidelines for other operations.

SEC rules for virtual asset providers

Anyone offering crypto or digital assets-related service in Nigeria is a VASP. The categorization of VASPs is further broken down into

1. Digital assets offering platforms – These platforms enable the issuance of digital assets for fundraising purposes.

They can also be referred to as the initial coin offering platform; this may be seen as a place where public companies offer their stocks for sale.

2. Digital Asset Custodian – According to SEC, this refers to a person who provides the services of safekeeping, storing, holding, or maintaining custody of virtual assets/digital tokens for another person’s account.

3. Digital Assets Exchange – This is an electronic platform that facilitates the trading, exchange, issuance of digital, and virtual assets. They are simply crypto exchanges such as Koinwa, Binance, Quidax, etc.

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