Nigeria SEC plans issue of asset-backed token but denied Crypto

Nigeria to implement blockchain technology in the banking sector

Nigeria’s Securities and Exchange Commission (SEC) is reviewing applications for digital exchanges on a pilot basis. As mentioned by Abdulkadir Abbas, head of securities and investment services at the commission said in an interview in Lagos “We always like to start, as a regulator, with a very simple clear proposal before we go into the complex ones.”

It is crucial to note here that the Central Bank of the country restricts any trading in crypto assets. As per the report published by Bloomberg, the head mentioned that the regulator is considering permitting tokenized coin offerings on licensed digital exchanges that are backed by assets including equity, debt, and property but not crypto. This rejection highlights the inherent problem with cryptocurrencies which is a lack of sovereign backing and price volatility.

Other nations are also testing similar tokens. For example, Singapore last year began a project to investigate potential uses of asset tokenization called “Project Guardian.” Project Guardian is a collaborative initiative with the financial industry that seeks to test the feasibility of applications in asset tokenization and defi while managing risks to financial stability and integrity. The pilot, led by DBS Bank Ltd., JPMorgan Chase & Co. and Marketnode Pte, involves the creation of a permissioned liquidity pool comprising tokenized bonds and deposits.

Though the SEC denied the use of crypto here, it will act as a potential way forward for promoting assets in the future. The Securities and Exchange Commission in Nigeria regulates the capital market and ensures that investors are protected. That means ensuring that processes increasingly get transparent and that transaction rules are complied with.

Importantly, African countries are playing an exemplary role in establishing a crypto ecosystem across the continent. For example, according to the African Blockchain report, blockchain funding this year surpassed the global average of 4 per cent in Nigeria, and earlier this year made plans to change the nation’s banking and finance industry by legalizing the usage of cryptocurrencies and blockchain technology. But this manifesto raised during the elections is currently resting in a corner.

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