By Taofik Salako, Deputy Group Business Editor
Securities and Exchange Commission (SEC) has directed investment crowdfunding portals and digital commodities investment platforms to register their operations with the Commission or cease operations by June 30, 2021.
The Commission stated that there were requirements and eligibility criteria for raising funds through crowdfunding as well as operating a crowdfunding portal.
According to the SEC, the rules governing crowdfunding business came into effect on the January 21, 2021, which was part of efforts by the Commission to ensure investor protection while encouraging innovation in the conduct of securities business.
“In line with the transitional provisions of the Rules, all persons and entities operating an investment crowdfunding portal and digital commodities investment platform prior to the commencement of the rules were expected to restructure all operations in accordance with the requirements of the rules and apply for registration not later than 90 days from the effective date.
“While the transitional period elapsed on the April 21, 2021, the Commission hereby directs investment crowdfunding portals and digital commodities investment platforms to note the requirements and eligibility criteria for raising funds through and operating a crowdfunding portal and comply with the registration requirements or cease operations by the June 30, 2021, failing which the operations of such platform would be categorized as illegal and attract regulatory sanction as stipulated in the rules,” SEC stated.
The NASD Plc, the owner of NASD OTC Securities Exchange, the trading platform for unlisted public securities, plans to launch trading in digital currency and equity crowd funding in 2021 as part of major initiatives to further deepen and diversify product base and services at the over-the-counter (OTC) exchange.
According to the NASD workplan for 2021, the Exchange also plans to launch its NASD Private Market to cater for specific fund raising requirements and open up a new vista in commercial paper (CP) issuance and trading.
SEC had earlier unveiled initial regulatory framework for all digital assets as part of its mandate to protect the investing public and regulate investment and securities business in Nigeria.
SEC noted that while digital assets offerings provide alternative investment opportunities for the investing public; it is essential to ensure that these offerings operate in a manner that is consistent with investor protection, the interest of the public, market integrity and transparency.
According to the Commission, the general objective of regulation is not to hinder technology or stifle innovation, but to create standards that encourage ethical practices that ultimately make for a fair and efficient market.
“Section 13 of the Investment and Securities Act, 2007 conferred powers on the Commission as the apex regulator of the Nigerian capital market to regulate investments and securities business in Nigeria. In line with these powers, the SEC has adopted a three-pronged objective to regulate innovation, hinged on safety, market deepening and providing solution to problems. ‘’
This will guide its strategy, its regulations and its interaction with innovators seeking legitimacy and relevance,” SEC stated.
SEC stated that it would henceforth regulate crypto-token or crypto-coin investments when the character of the investments qualifies as securities transactions.
SEC’s position is that virtual crypto assets are securities, unless proven otherwise and the burden of proving that the crypto assets proposed to be offered are not securities and therefore not under the jurisdiction of the Commission, is placed on the issuer or sponsor of the said assets.
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