SEC noted in a statement that these guidelines aim not to hinder technology or stifle innovation, but to create standards that encourage ethical practices that ultimately make for a fair and efficient market.
It defined “Crypto Asset” as means a digital representation of value that can be digitally traded and functions as a medium of exchange; and/or a unit of account; and/or a store of value, but does not have legal tender status in any jurisdiction.
“A Crypto Asset is – neither issued nor guaranteed by any jurisdiction, and fulfils the above functions only by agreement within the community of users of the Crypto Asset; and Distinguished from Fiat Currency and E-money,” it clarified.
More about Nigeria’s guidelines
As the regulator of the Nigerian capital market, SEC adopted a three-pronged objective to regulate innovation. They are safety, market deepening and providing solution to problems.
“Consequently, the SEC will regulate crypto-token or crypto-coin investments when the character of the investments qualifies as securities transactions,” it added.
SEC will deal with cryptocurrencies as securities unless proven otherwise. It clarified that the issuer/ sponsor of the assets are responsible for proving that the cryptos are not securities.
Moreover, the issuers/sponsors must prove that the virtual assets do not constitute securities by making an initial assessment filing.
After proving that the assets are securities, the issuer or sponsor must register the digital assets.
Meanwhile, existing digital assets will have 3 months to either submit the initial assessment filing or documents for registration proper.
Anyone engaged in services and activities related to blockchain must be registered by the Commission and follow the guidelines.
“Such services include, but are not limited to reception, transmission and execution of orders on behalf of other persons, dealers on own account, portfolio management, investment advice, custodian or nominee services,” it added.
In addition, the Commission may require foreign or non-residential issuers or sponsors to establish a branch office within Nigeria.
Foreign companies must be a member of the International Organization of Securities Commissions (IOSCO).