The Nigerian Securities and Exchange Commission (SEC) is currently evaluating applications for digital asset exchanges on a provisional basis. The country considers allowing tokenized coin offerings backed by equity, debt, or property, but excluding cryptocurrencies, on licensed digital asset platforms. As reported by Bloomberg, this development indicates that the regulatory body is moving towards a more progressive approach to digital assets while maintaining caution.
The SEC Must Simplify Proposals for Regulatory Implementation
Abdulkadir Abbas, the Head of Securities and Investment Services at the Abuja-based commission, emphasizes the importance of starting with straightforward proposals before delving into more complex regulatory matters. By adopting this strategy, the Nigerian SEC can gradually ease into the evolving digital asset landscape and ensure a stable foundation for future developments.
As part of the regulator’s cautious approach, digital exchange applications are being processed on a trial basis. In addition, these platforms will undergo a one-year “regulatory incubation” period during which they will offer limited services under the watchful eye of the SEC. This incubation process assesses the applicants’ capability to provide services in the digital asset domain.
By the end of the 10th month, the SEC will decide whether to register the firm officially, extend the incubation period, or request the company to cease operations, as detailed by Abbas during his interview with Bloomberg.
The SEC will not begin registering digital asset exchanges until it reaches a consensus with Nigeria’s central bank. The central bank has previously obstructed local financial institutions from engaging with cryptocurrency service providers. That effectively slows down the growth of digital assets in the nation. Before the central bank’s stringent measures, Nigeria had been one of the fastest crypto adopters in the region.
New Bill Proposes Crypto as Capital for Investment
Despite the central bank’s opposition to cryptocurrencies, ongoing efforts exist to include crypto assets within the regulatory framework. A new bill that could potentially recognize cryptocurrencies as capital for investment purposes is currently under consideration.
If passed, this legislation would signal a significant shift in Nigeria’s stance on digital assets. It also paves the way for further integrating cryptocurrencies into the nation’s financial ecosystem.
The Nigerian SEC’s exploration of tokenized offerings and digital asset exchanges demonstrates a willingness to adapt to the rapidly changing financial environment.
While the central bank’s resistance to cryptocurrencies presents a challenge, the potential recognition of crypto as capital for investment through new legislation suggests that Nigeria may be on the verge of a more inclusive regulatory framework for digital assets.
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