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Nigeria’s Securities and Exchange Commission Moves to Regulate Cryptocurrencies

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SEC Says Cryptocurrencies Are Assets Under its regulatory Jurisdiction

Nigeria’s Securities and Exchange Commission (SEC) said it will start regulating unregulated digital assets like Bitcoin and other cryptocurrencies.

The Commission made the statement on Monday in a publication released on its website.

It said the objective is not to hinder technology or stifle innovation but to create standards that encourage ethical practices and protect both investors and businesses offering digital assets as an investment vehicle.

The statement reads, “Since digital assets offerings provide alternative investment opportunities for the investing public, it is essential to ensure that these offerings operate in a manner that is consistent with investor protection, the interest of the public, market integrity and transparency.”

SEC said it has been conferred powers by section 13 of the Investment and Securities Act, 2007 to regulate investments and securities business in Nigeria.

It, therefore, stated that in line with these provisions, it has adopted a three-pronged objective to regulate market innovation, foster investment safety, deepen market provisions and provide solutions to investment problems.

It said, “Section 13 of the Investment and Securities Act, 2007 conferred powers on the commission as the apex regulator of the Nigerian capital market to regulate investments and securities business in Nigeria.

“In line with these powers, the SEC has adopted a three-pronged objective to regulate innovation, hinged on safety, market deepening and providing solution to problems. This will guide its strategy, its regulations and its interaction with innovators seeking legitimacy and relevance.

“Consequently, the SEC will regulate crypto-token or crypto-coin investments when the character of the investments qualifies as securities transactions.”

Accordingly, the commission explained that virtual assets are securities unless proven otherwise.

It said, “Issuers or sponsors are expected to satisfy the burden of proving that the virtual assets do not constitute securities by making an initial assessment filing.

“However, where the finding of the commission is that the virtual assets are indeed securities (not structured to be exclusively offered through crowdfunding portals or other exempt methods), then the issuer or sponsor must register the digital assets.

“The registration process for virtual assets will therefore involve a two-prong approach – an initial assessment filing to satisfy the burden of proof and a filing for registration proper, either made directly by the issuer or sponsor or where the burden of proof is not satisfied.

“Similarly, all digital assets token offering, initial coin offerings, security token ICOs and other Blockchain-based offers of digital assets within Nigeria or by Nigerian issuers or sponsors or foreign issuers targeting Nigerian investors, shall be subject to the regulation of the commission.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Cryptocurrency

Binance Plans To Launch A Decentralized NFT Platform

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Binance has announced that it will soon be launching “a non-custodial, on-chain platform to facilitate the full lifecycle of NFTs for creators, brands and their fans.” The new platform is called “Featured by Binance”.

“We are excited to announce the imminent launch of a new platform that we’ve been incubating called Featured by Binance. Our vision is to provide a non-custodial, on-chain platform to facilitate the full lifecycle of NFTs for creators, brands and their fans.”

According to the CEO of Featured by Binance, at launch, the platform will focus on helping Binance’s brand partners.

“We want to apply our deep experience in launching tokens and creating markets to the NFT space. At launch, the platform will focus on helping our brand partners launch NFT assets with strong unique narratives, a marketplace to trade those assets, and creator tools to mint, sell and showcase their NFT creations.”

Here is what Binance has to say about the current state of the NFT market:

“It’s interesting to observe that the hype was driven in equal parts by creators/fans embracing this newfangled technology, and on the flip side, mainstream media who is desperately trying to understand why anyone would spend meaningful money on easily replicable digital assets.

“In any case, the NFT hype peaked in early May 2021 and has since settled back down to less frothy levels. Even then, NFT transaction volumes are an order of magnitude higher than before, when hardly anybody knew what NFTs were. I’ll take 10x growth in three months any day…

“We believe that the next evolution of digital goods will be on the blockchain and NFTs are the first step towards that transformation.”

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Bitcoin

Tesla Will Resume Taking Bitcoin as Payment Once Miners Go 50% Green, Musk Says

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Bitcoin at Record High; Breaches $6,000 Level

Tesla Inc (TSLA.O) Chief Executive Officer Elon Musk tweeted on Sunday that the electric carmaker will resume allowing bitcoin transactions when miners who verify transactions use more renewable energy.

Tesla will resume accepting bitcoin as payment once the cryptocurrency’s power-hungry miners go halfway green, CEO Elon Musk tweeted.

Musk halted Tesla’s months-old crypto foray in mid-May citing environmental concerns. But “when there’s confirmation of reasonable (~50%) clean energy usage by miners with the positive future trend, Tesla will resume allowing Bitcoin transactions,” he said in the tweet.

It is unclear how Musk will fact-check miners‘ clean energy usage as there is widespread debate over where the industry currently stands. Even so, the comments provide a first benchmark for reinstating bitcoin payments at Tesla.

Elon Tweet

Musk’s tweet also reiterates his defense of having sold 10 percent of the electric vehicle maker’s bitcoin stash in Q1 and would also seem to indicate the company hasn’t sold anymore.

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Bitcoin Got Its First Makeover In Four Years

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The first bitcoin upgrade in four years has just been approved by miners around the world. It is a rare moment of consensus among stakeholders, and crypto experts tell CNBC it’s a pretty big deal for the world’s most popular cryptocurrency.

The upgrade is called Taproot, and it’s due to take effect in November. When it does, it will mean greater transaction privacy and efficiency – and crucially, it will unlock the potential for smart contracts, a key feature of its blockchain technology that eliminates middlemen from even the most complex transactions.

“Taproot matters, because it opens a breadth of opportunity for entrepreneurs interested in expanding bitcoin’s utility,” said Alyse Killeen, Founder and Managing Partner of bitcoin-focused venture firm Stillmark.

Unlike bitcoin’s 2017 upgrade – referred to as the “last civil war” because of the contentious ideological divide separating adherents – Taproot has near universal support, in part because these changes are fairly incremental improvements to the code.

What’s changing

Bitcoin’s makeover has to do with digital signatures, which you can think of as the fingerprint individual leaves on every transaction they make.

Right now, the cryptocurrency uses something called the “Elliptic Curve Digital Signature Algorithm,” which is created from the private key which controls a bitcoin wallet and ensures that bitcoin can only be spent by the rightful owner. Taproot will switch over to something known as Schnorr signatures, which essentially makes multi-signature transactions unreadable, according to Alejandro De La Torre, Vice President at Hong Kong-headquartered major mining pool Poolin.

In practice, that means greater privacy, because your keys won’t have as much exposure on the chain. “You can kind of hide who you are a little bit better, which is good,” said Brandon Arvanaghi, previously a security engineer at crypto exchange Gemini.

It won’t translate to greater anonymity for your individual bitcoin address on the public blockchain, but it will make simple transactions indistinguishable from those that are more complex and comprised of multiple signatures.

These souped-up signatures are also a game-changer for smart contracts, which are self-executing agreements that live on the blockchain. Smart contracts can theoretically be used for practically any kind of transaction, from paying your rent each month to registering your vehicle.

Taproot makes smart contracts cheaper and smaller, in terms of the space they take up on the blockchain. Killeen says that this enhanced functionality and efficiency presents “mind-blowing potential.”

Currently, smart contracts can be created both on bitcoin’s core protocol layer and on the Lightning Network, a payments platform built on bitcoin, which enables instant transactions. Smart contracts executed on the Lightning Network typically lead to faster and less costly transactions.

“Lightning transactions can be fractions of a penny…while a bitcoin transaction at the core protocol layer can be much more expensive than that,” explained Killeen.

Developers have already begun to build on Lightning, in anticipation of the upgrade, which will allow for highly specific contracts.

“The most important thing for Taproot is…smart contracts,” said Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings. “It’s already the primary driver of innovation on the ethereum network. Smart contracts essentially give you the opportunity to really build applications and businesses on the blockchain.”

As more programmers build smart contracts on top of bitcoin’s blockchain, there is also the potential for bitcoin to become more of a player in the world of DeFi, or decentralized finance, a term used to describe financial applications designed to cut out the middleman.

Today, ethereum dominates as the blockchain of choice for these apps, also referred to as “dapps.”

Why the wait

Though the bitcoin community has agreed to the upgrade, the rollout itself won’t happen until probably November. A lot of testing ahead of time will reduce the likelihood of something going wrong during an upgrade.

“Upgrades allow the – extremely remote – possibility of a bug entering the system, which would destroy confidence in the whole cryptocurrency system, effectively wiping it out – a ‘self-inflicted wound’ if you like,” said Jason Deane, an analyst at Quantum Economics.

Deane says this is why upgrade processes are so carefully tested, retested, and vetted, again and again, over very long periods of time, prior to being deployed.

Many also remember the disastrous migration of 2013, when an upgrade went wrong and resulted in bitcoin temporarily splitting in half.

“You don’t want different clients or miners in the protocol out of sync. That’s how catastrophic stuff happens,” Nic Carter, founding partner at Castle Island Ventures, told CNBC. “Because we don’t want a repeat of 2013, we have these extremely long lead times.”

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