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All digital assets are securities says Nigeria’s SEC

Nigeria’s SEC has said all digital assets are securities in their new rulebook. This is their attempt to clarify the role of cryptocurrencies in the economy. It will be interesting to see if this step affects how the US regulates crypto, as there is already a lot of debate on crypto being termed as securities. As for Nigeria, their new rulebook says that a digital asset (token) is either debt or equity claim on its issuer. Therefore, it falls under their country’s Securities and Exchange Commission.

Nigeria’s new crypto laws

The crypto laws are their attempt to bring some clarity to the regulatory framework. Exchanges need to have a capital of 500,000 NGN and have a fidelity bond of a minimum of 25% of the amount. A fidelity bond is a type of business insurance that protects an employer from damages caused by its workers’ fraudulent or dishonest activities.

All digital assets are securities says Nigeria's SEC

Nigeria’s SEC has also asked the exchanges to be “fair, reasonable, and transparent” with their fees. This is important as a lot of exchanges claim they do not charge any fees but then make up for the amount with huge spreads between buying and selling prices. A good example of this used to be Coinswitch Kuber from India.

Finally, the SEC has also asked exchanges to get a no-objection letter from them, for the assets they are planning to let users trade on the platform.

What are securities?

The term “security” refers to any fungible, negotiable financial instrument with monetary value. It reflects stock ownership in a publicly listed firm, a creditor connection with a governmental body or corporation represented by holding that entity’s bond, or ownership rights represented by an option.

To determine whether cryptocurrencies are securities or not, there is the Howey test. If the answers to the questions in the test are “yes,” then something can be considered a security.

  1. Is there an investment of money with the expectation of future profits?
    2. Is there an investment of money in a common enterprise?
    3. Do any profits come from the efforts of a promoter or third party?

What are your thoughts on Nigeria’s SEC terms all digital assets are securities? And do you think this is a positive or negative step? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.

Also Read: Former Goldman Sachs CEO advises everyone to prepare for US Recession.



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