On this Monday i.e. September 14, 2020, the Securities & Exchange Commission of Nigeria (SEC) has announced that it is set to regularize the crypto-based investments and blockchain technology within the country for the purposes of which it has already drafted rules and regulations for promoting the business relating to crypto.
Crypto enthusiast immediately responded to the news and said that the newly formed rules and regulations by SEC are an initiation of the Nigerian Government which is to be appreciated as it allows the crypto-based investments to flourish within the country.
The proposed rules have been formed to cater to crypto-tokens and coins investment if it qualifies the nomenclature of being “securities” transactions, said an official of SEC. According to draft rules the digitalized crypto assets will be treated as securities or in the case the assets are not securities then the asset will be subject to scrutiny by the SEC. As per the rules, the onus of proving whether the asset is “security” or otherwise, is placed on the sponsors of the asset. If the SEC comes to the determination that the asset is a security for all intents and purposes then the issuer or the sponsor will be obligated to get the asset registered with the Commission otherwise in the absence of the required registration the asset will be treated “illegal” and cannot be offered for trading purposes.
The registration process of the digitalized asset is a twofold process in which firstly the Commission will scrutinize the assessment at the filing of filing followed by an application submitted by the sponsor for registration of the asset as security.
Similarly, any crypto-based offerings such as DATO, ICOs, etc. will be subject to rules and regulations formed by the SEC. The rules and regulations will be applicable to the existing offerings within Nigeria and necessary directions have been issued to their issuers and sponsors to get the offerings registered with the SEC within a period of three months. Upon failure of an issuer/sponsor to get the offerings registered within 3 months period will result in the suspension of the offerings.