The Commission provided a special window for the on boarding of virtual assets service providers (VASPs) tagged Accelerated Regulatory Incubation Programme (ARIP).

All operating and prospective VASPs were directed to visit the SEC ePortal to complete the application process no later than 30 days from the date of the Circular.

The Central Bank also released guidelines for banks on digital assets (e.g. on offering accounts to crypto firms).

Among its recommendations, the central bank said it would:

• consider the development of a regulatory framework for stablecoin offerings;
• continue its watching brief on initial coin offerings (ICOs) as well as working with the Security Exchange Commission to jointly develop a regulatory framework for an ICO-based investment solution;
• keep an active watching brief on blockchain solution for the Naira while collaborating with relevant stakeholders to identify resources to track and report on potential deployments of blockchain solution in other countries;
• engage with other central banks on potential joint venture to investigate and implement a central bank digital currency solution.

The burden of proof of proving that the proposed cryptoassets are not securities will fall on the issuer or sponsor, which will be able to do so by making an initial assessment filing.

However, should the SEC find that the virtual assets are securities (not structured to be exclusively offered through crowdfunding portals or other exempt methods), then the issuer or sponsor must register the digital assets.

The registration process will involve a two-prong approach: an initial assessment filing to satisfy the burden of proof and a filing for registration proper, "either made directly by the issuer or sponsor or where the burden of proof is not satisfied".

The SEC said:

"Similarly, all Digital Assets Token Offering (DATOs), Initial Coin Offerings (ICOs), Security Token ICOs and other Blockchain-based offers of digital assets within Nigeria or by Nigerian issuers or sponsors or foreign issuers targeting Nigerian investors, shall be subject to the regulation of the Commission. Existing digital assets offerings prior to the implementation of the Regulatory Guidelines will have three (3) months to either submit the initial assessment filing or documents for registration proper, as the case may be."

The SEC confirmed that any individual or corporate, on their own behalf or on the behalf of others, involved in blockchain-related and virtual digital asset services must register with it and will be subject to regulatory guidelines.

The SEC may also require foreign or non-residential issuers or sponsors to establish a branch office in the country,

The SEC should issue guidelines and standards for White Papers and initial coin offerings (ICOs):

• Advertising and issuance procedures should be defined without ambiguity.
• The SEC should create appropriate licensing regimes for new entrants into the crowdfunding ecosystem.
• The SEC should develop a detailed framework for VFA based economy.

On anti-money laundering and 'know your customer' (KYC) procedures, the SEC should develop a stringent framework for KYC and due diligence which will apply regardless of the legal status of an ICO or token.

The SEC should also have clear taxonomies of tokens based on their nature, characteristics and economic realities as their determining factors.

The CBN warned the public that cryptocurrencies, such as bitcoin, monero or litecoin, and exchanges, such as Nigerian bitcoin exchange NairaE, are “not licensed or regulated” by it.

The release states that dealers and investors in cryptocurrencies in Nigeria are not afforded the protection of the law.

“Virtual currencies are traded in exchange platforms that are unregulated, all over the world. Consumers may therefore lose their money without any legal redress in the event these exchangers collapse or close business,” the release says.