The SEC’s stance contrasts sharply with the Central Bank of Nigeria (CBN). The CBN prohibits Nigerian financial institutions from doing business with firms involved in crypto. Yet, SEC laws mandate that platforms and exchanges that issue digital tokens have trust accounts with the banks to whom they send the tokens.
Nigeria has been a pioneer in the global acceptance of cryptocurrency. This breakthrough has the potential to legitimize crypto and associated industries. Besides, it can bring up new opportunities for their use in Nigeria. The SEC’s guidelines might also give the CBN a framework for financial institutions in the country to deal with crypto.
A virtual asset service provider (VASP) license is now required for any firm wanting to sell crypto goods and services in Nigeria. VASP permits are not enough to operate as a digital asset exchange. A set of responsibilities go with the VASP license. Furthermore, it requires license holders to receive self-declared risk acknowledgment papers from users.
Virtual asset service provider in Nigeria to observe AML
VASPs also implement Anti-money laundering and countering the financing of terrorism (AML/CFT) guidelines. Besides the VASP guidelines, the regulations cover the following areas. An exchange for the trading of digital assets, Issuing of tokens, keeping an eye on digital assets, and supplying them with the platforms they need.
All crypto exchanges serving Nigerian customers must now get permission from the SEC. By registering to SEC, a dealer will be granting the agency access to their information. Also, the SEC will need dealers to issue trade data to them.
According to the SEC, one can not trade digital assets on an exchange unless it receives a “no objection” from the SEC in the first place. A person must submit applications for each asset that the exchange plans to list. Applicants need to prove that the exchange has appropriate knowledge of the project and its risks. Exchanges must also perform real-time market surveillance as a part of their mandate.
Issuing of tokens
A project must file an evaluation form with the SEC and submit a thorough whitepaper copy to conduct ICOs in Nigeria. When there is a consideration in the proposed token by the Commission, the issuer must adhere to the country’s securities rules.
SEC could exclude Token-issuing projects from the registration requirements in a few instances when a dealer designs security tokens for sale. Moreover, when selling only on a crowdfunding site.
SEC will allow Nigerians to raise a maximum of NGN 10 billion, or approximately $24.1 million, by the Securities and Exchange Commission (SEC). The Commission has the authority to revise this number at any time.
While the laws provide for the operation of a digital asset custody company in Nigeria, they do not appear to require Digital Assets Offering Platforms (DAOP) providers and platforms to utilize impartial custodians. A DAOP has permission to offer its custody services according to application requirements. There are no specific rules about an exchange’s safekeeping of user assets.
Every digital asset project that wants to seek funds through a DAOP operator must undergo vetting. If approved, then it can get a green light for funding. A DAOP should keep investors updated on the projects it advertises.
Also, the platform should track the projects’ use of funds. The tracking will guarantee that they’re used for the stated reasons in their separate whitepapers.
Digital asset management and protection
The SEC laws provide that one can trade digital asset custody in Nigeria. The law does not need DAOP operators and exchanges to use independent custodians under the rules.
The law allows DAOP to provide its custody services as long as it follows all applicable rules and rules. Yet, how an exchange should hold user assets is not specified precisely.
Besides, the laws are vague on how and where people may keep the assets. Custodians in Nigeria are only required to keep their customers’ assets separate from their own.
