Nigeria’s SEC doesn’t want digital tokens backed by crypto

• The Nigerian Securities and Exchange Commission will reportedly allow exchanges to list tokens backed by equity, debt, and property.
• The regulator is not open to allowing tokenized coin offerings that are backed by cryptocurrencies.

The Securities and Exchange Commission (SEC) of Nigeria is reportedly looking to allow tokenized coin offerings on licensed digital exchanges in the country, as long as the underlying asset is not a cryptocurrency.

The regulator has already started processing applications for digital exchanges on a trial basis. 

SEC will allow tokens backed by equity, debt or property

According to a report by Bloomberg, Nigeria’s SEC will allow digital exchanges to list tokenized coin offerings backed by equity, debt, and property. Crypto-backed tokens will reportedly stay off-limits.

The securities regulator aims to start with a simple and clear proposal before moving to complex ones. The securities watchdog wants to register fintech firms as digital sub-brokers, crowd-funding intermediaries, robo-advisors, fund managers, and tokenized coins issuers.

Registration for crypto exchanges will not be facilitated, in line with the order issued by the country’s central bank.

Abdulkadir Abbas, who leads the securities and investment services at the Nigerian SEC, told Bloomberg that all interested digital exchanges will have to undergo a one-year incubation period during which the regulator will monitor them for regulatory compliance.

During this period, the digital exchanges participating in the regulatory incubation will offer limited services to their customers while the SEC monitors the pattern of their operations and determines if they’re fit to offer the services in the country. Abbas added,

“By the 10th month, we should be able to make a determination whether to register the firm, extend the incubation period or even ask the firm to stop operation.” 

The latest move for Nigeria’s Securities and Exchange Commission is part of ongoing efforts to attract the country’s tech-savvy individuals to local assets like equities.

The regulator is reportedly targeting 43% of its population which is under the age of 14. This target crowd will play a significant role in furthering the adoption of digital payments as the country opens new avenues to facilitate them in the future.