Nigeria’s president signs bill recognizing digital assets into law

Nigeria’s President, Bola Ahmed Tinubu, has signed the Investments and Securities Act 2024 into law, making its provisions officially enforceable.

The act now classifies digital assets and cryptocurrencies as securities, bringing them under the regulation of the Nigerian Securities and Exchange Commission (SEC).

The details 

• According to reports, the SEC announced the development last Saturday, adding that the act supersedes the previous ISA 2007 Act. 
• The new act, apart from granting legal recognition to cryptocurrencies, also expands the definition of securities to include investment contracts. 
• This expansion grants the SEC regulatory authority over crypto exchanges and other virtual asset service providers and ensures that their activities are governed by the regulator’s provisions. 
• In addition, the act put forward stricter penalties for Ponzi schemes and their operators, many of whom have used crypto to run their scams in recent years.

Key quotes 

• The director-general of the SEC, Emomotimi Agama commented: 

“The ISA 2024 reflects our commitment to building a dynamic, inclusive and resilient capital market. By addressing regulatory gaps and introducing forward-looking provisions, the new Act empowers SEC to foster innovation, protect investors more efficiently and reposition Nigeria as a competitive destination for local and foreign investments." 

Why this matters

• Regulations around digital assets in Nigeria have begun to pick up pace in recent years with the SEC leading the country’s crypto regulatory drive. 
• In February, Mariblock reported that the SEC was working on revising existing regulations to allow for the taxation of crypto assets in a revenue generation move. 
• The SEC wanted to expand its licensing framework to allow Nigerians to trade on centralized exchanges where transactions can be easily monitored for tax purposes. 
• It is unclear if the proposed amendments on crypto taxation are included in the just-assented ISA 2024. 

Before now 

• In 2023, the Central Bank of Nigeria permitted local banks to serve virtual assets service providers but only if they are licensed by the SEC. 
• Midway through last year, the SEC started its regulatory drive. It expanded its accelerated regulatory incubation program (ARIP) to include digital assets and allow virtual assets service providers (VASPS) to register and operate within the sandbox. 
• The move, meant to fast-track the onboarding process for VASPs, culminated in two local exchanges — Busha and Quidax — receiving provisional licenses to operate in the country.