Nigeria is top among the nations of the world which has engaged in cryptocurrency activities. It is no longer news that Nigeria is the second country in the world that has the largest crypto market.
The country is among the nations of the world that have not fully adopted crypto. In fact, Nigeria’s apex bank, the Central Bank of Nigeria banned activities involving cryptocurrency in its financial institutions.
Despite these, the number of Nigerians using P2P platforms and taking part in crypto endeavors is increasing daily. This growth has seen the Central Bank launched its own digital currency known as E-Naira, while the nation’s securities regulator has announced new rules in line with crypto.
In this post, we’ll discuss the new rules announced by the Nigerian Securities and Exchange Commission (SEC. Before then, let’s see the growth of crypto in Nigeria as of today.
Cryptocurrency in Nigeria Today
Despite the ban in crypto operations in Nigeria’s financial institution by the Central Bank of Nigeria, the numbers reached by crypto investors is mouthwatering.
According to Statista data, Nigeria is listed top of countries using crypto the most. 32% of the over 170 million population deal with crypto which makes it number one in Africa.
Crypto made a huge statement in Nigeria during the ENDSARS protest which got several young Nigerians donating to the movement in digital currencies.
Today, young Nigerians have taken the opportunity provided by their smartphones to invest and earn in crypto assets. This makes Nigeria the second country in the world that has the largest crypto market only behind USA.
The number of users on P2P platforms such as Prestmit, Remits, and so on have also increased. A lot of Nigerians are also active users of the leading crypto exchanges such as Binance, Coinbase, Kraken etc.
Nigerian entrepreneurs are also launching new crypto projects among which has been listed on CoinMarketCap, Coingecko, etc. As the crypto community is increasing and expanding, bodies such as the SEC have now made it a point to have a rule governing the issuing of crypto.
Why is Crypto Booming in Nigeria?
Although the Nigerian government has not fully back activities regarding the use of digital assets, nevertheless, it has boomed. Many Nigerians especially the teeming youthful population have for several reasons tested their legs in the waters of crypto. Listed below are the major reasons for its boom in Nigeria.
1. Crypto is used to hedge inflation– The dollar rate is up in several African countries as a result of high inflation. Mostly, people in these countries get involved in trading and investment in crypto to hedge against inflation of their local currencies such as Naira.
2. High population of youths – Nigeria for example has one of the youngest population who are unemployed. With the use of smartphones, the adoption of the use of current trends in technology and finance has been grabbed. Young Nigerians have look to investment in Bitcoin and other coins which is high and in a boom.
3. Unemployment rate among youths– Lack of employment opportunities has made many youths to invest and trade to earn money. Some people trade Bitcoin thus buying and selling on P2P platforms like Prestmit. The idea is to make profit from the transactions. Others who have taken to cyber fraud also deal with crypto ‘to clean’ their money. This is however one of the reasons crypto transactions are banned in Nigeria financial institutions.
4. Underdeveloped infrastructures in the continent– Crypto has boom in the continent due to underdeveloped infrastructures especially in the financial institutions. The historic issues with colonialism, civil wars, & harsh terrains have led to the infrastructure problems. The financial services which is less accessible coupled with regulations against crypto activities aided the use of peer-to-peer platforms. This led to the boom of crypto in the African continent especially Nigeria.
Nigeria’s Securities Regulator Rules Governing Crypto
About a week ago, the Nigerian Securities and Exchange Commission (SEC) announced new rules that govern the issuing of digital assets as securities.
This also include rules on the registration requirements for digital assets offering platforms (DAOPs). Virtual asset service providers (VASPs) and digital assets exchanges are not left out in the new set of rules that were recently published by the commission.
There are set rules for those who wants to raise funds via coin offering or a private token sale. The whitepaper and the draft document for the projects to be launch are also put into SEC’s regulation.
Things To Know About Nigeria’s SEC Rules Governing Cryptocurrency
Here are the things crypto investors/traders/companies needs to know about the issuing of digital assets in Nigeria. They are listed below
1. Individuals or entities seeking to raise funds via a coin offering or a private sale of tokens must first submit an initial assess form and draft whitepaper.
2. An entity seeking permission to operate must furnish its whitepaper with complete and current information regarding the initial digital asset offering projects, business plan and feasibility study.
3. The draft document must also give a brief description of the initial digital asset offering, the value of each token, and the privileges it gives to the buyer.
4. The use and allocation of the funds must also be stated in the draft whitepaper.
5. Concerning white papers of initial digital asset offering projects, the document should have a disclaimer stating this does not represent an offer to sell.
6. Once the required documentation has been filed, the SEC will review it to make a determination.
7. The review would be within 30 days from receipt to determine whether the digital asset proposed to be offered, constitutes a ‘security’ under the Investment and Securities Act 2007.
8. After a determination is made, the SEC will communicate this to the issuer within five days of the conclusion of the review.
9. For an applicant seeking to register as a DAOP, the new rules say they must pay a filing fee equivalent to $241, a processing fee of $724, and a registration fee of $72,430.
10. The DAOP are to maintain a register of initial token holders who subscribed for the virtual assets/digital tokens during the offer period and enter into the register.
11. On using another platform as a host, an issuer shall not be hosted concurrently on multiple DAOP or on an equity crowdfunding platform.
Also Read- How Much Does It Cost To Build Your Cryptocurrency?
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