Nigeria’s Securities and Exchange Commission (SEC) is reportedly looking to license digital exchanges to enable the issuance of asset-backed tokens in the country. Legalizing bitcoin (BTC) and other cryptos is not in the regulator’s plans in the short term.
SEC to approve digital exchanges
While Nigeria, the most populous country in Africa, has since outlawed bitcoin (BTC) and altcoins, with residents resorting to peer-to-peer (P2P) exchange platforms for their digital assets transactions, it appears that narrative might soon change.
Per sources close to the latest development, the Nigeria Securities and Exchange Commission (SEC), the agency in charge of regulating the country’s capital market, is now set to license firms in the region to offer tokenized assets backed by equity, debt, real estate, and other financial instruments except crypto.
The SEC will register financial technology (fintech) firms in the region as tokenized coin issuers, digital sub-brokers, and more. However, the agency has made it clear that crypto exchanges will only be greenlighted in the country if market participants reach an agreement with the apex bank on “standards.”
Crypto regulation in the pipeline
Fintech firms that are interested in offering tokenized assets in the country will be subjected to a “regulatory incubation period,” during which they will only be allowed to offer minimal tokenized products under the SEC’s purview, prior to the agency’s final decision.
“We always like to start, as a regulator, with a very simple clear proposal before we go into the complex ones. By the 10th month, we should be able to determine whether to register the firm, extend the incubation period or even ask the firm to halt operations.”
Abdulkadir Abbas, SEC’s head of securities and investment services.
While the SEC hinted last December that the use of crypto as “capital for investment” will be approved after the passing of the country’s “Investments and Securities Act, 2007 (amendment) Bill” into law, the regulator is yet to make that move even though the bill has taken effect.
It will be recalled that Nigeria’s central bank earlier this, year signaled plans to formulate a regulatory framework for stablecoins and initial coin offerings (ICOs), as it sees them as a possible tool for attracting foreign direct investment to the nation.
If the SEC’s latest move to offer regulatory incubation for tokenized assets goes smoothly, it’s very likely that the regulator could join forces with the central bank to expand the framework to support cryptocurrencies in the near future.