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.”