An Overview of the Nigerian Securities and Exchange Commission Rules on Issuance, Offering Platforms and Custody of Digital Assets
In a bid to commence the regulation of digital assets backed securities issuances and the licensing and registration of market participants, the Securities and Exchange Commission (SEC/The Commission) on the May 15, 2022, published its New Rules on Issuance, Offering Platforms, and Custody of Digital Assets (“the Rules”). The SEC has defined a digital asset as any digital token that represents assets such as a debt or equity claim on an Issuer.
Following the Central Bank of Nigeria’s circular in February 2021; prohibiting banks and other financial institutions from undertaking cryptocurrency transactions, facilitating payments or settlement for crypto currency transaction; many cryptocurrencies enthusiast have switched to settlement of cryptocurrency transactions via peer-to-peer platforms whilst the market continues to grow in upward geometric progression. Even though the SEC definition of digital assets extends far beyond cryptocurrencies; the publication of the new rules represents a positive shift which is expected to bolster market confidence, establish standards of operations, and encourage ethical practices that will protect the investor community whilst entrenching fair market practices.
The Rules apply to all Issuers seeking to raise capital via any form of digital asset offerings and other market participants within the Digital Assets value chain.