I have received many questions on the new Securities and Exchange Commission (SEC) Nigeria regulations which are designed to govern cryptocurrency, NFT and other digital assets in the nation.
First, I commend the SEC for at least starting a conversation on regulating this fledgling sector. As I noted yesterday, only the government will save Bitcoin from itself. Yes, while some can trade and hodle $200, for the real players with $billions to come along, you need an order which only the government can offer. With what SEC has published, there is a small clarity now for innovators to navigate in Nigeria; that is better than an outright ban.
Secondly, I will also ask the SEC to work on an Act with the National Assembly to make it evident that crypto assets are clearly protected by current law. Decades ago, emails were not admissible in some courts, voiding contracts executed via emails. That loophole has been fixed with updated laws. Crypto assets must be clearly unambiguous and I do think we may need small regulations to bring that up to speed. The SEC needs to check this and ratify where necessary.
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Thirdly, the $1 million paid-up capital requirement is too high: “Other requirements include, minimum paid-up capital and fidelity bond – N500 million and current Fidelity Bond covering at least 25% of the minimum paid-up capital as stipulated by the Commission’s rules and regulations.” With this amount, only well funded startups will run the show. It is going to be near impossible for any local player to meet this requirement. The SEC would have divided this into foreign and local classes, just as we do in banking licenses, with the foreign ones required to have $1 million while local startups can go for $200,000 paid-up capital.
Finally, you can still comply with all these requirements as set up by SEC, and banks will still refuse to open bank accounts for you, because the Central Bank of Nigeria (CBN) has a standing instruction to wean the banking sector of anything cryptocurrency. Until CBN has set aside that instruction, these regulations do not help that much. The SEC must work with CBN to reverse itself since no one can confidently begin work to seek compliance when you are not sure any bank can serve you.
You can download the regulations here.
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