Nigeria Issues Crypto Asset Rules In A Move That Could Boost Adoption

The Securities Exchange Commission of Nigeria has published new rules relating to the issuance, exchange and custody of digital assets in the country. This comes 20 months after the Commission initially issued a statement on how it would classify and treat digital assets.

Digital assets are a catch-all term for all types of crypto assets.

SEC’s position is also in stark contrast to that of the Central Bank of Nigeria (CBN), which currently restricts local financial institutions from doing business with crypto-related businesses. Notably, the new SEC rules require token issuance platforms and exchanges to maintain trust accounts with receiving banks.

Overall, this development could bring legitimacy to crypto and related businesses and ultimately open new doors for crypto usage in Nigeria, which is one of the leading countries for crypto adoption globally. SEC’s rules could also provide the CBN with a framework within which financial institutions in the country may interact with crypto.

For starters, entities looking to offer any kind of crypto products and services in Nigeria or to Nigerians must now secure a virtual asset service provider (VASP) license. This will be in addition to relevant category licenses. For instance, an exchange would need a digital asset exchange license in addition to the VASP permit.

The VASP license comes with its own set of obligations. Particularly, license holders need to obtain self-declared risk acknowledgment forms from users while also issuing a disclaimer that losses from investments aren’t covered by any protection fund. VASPs must also employ anti-money laundering/combating the financing of terrorism (AML/CFT) standards.

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