Nigeria’s cryptocurrencies and blockchain community could likely be given a clear stance on the classification of cryptocurrencies before the end of this year by the country’s Securities and Exchange Commission (SEC).
What the Upcoming Cryptocurrency Regulation Framework is all about
As per the recent report by Pulse, the regulatory institution is set to effectively implement the roadmap for the fintech industry as it connects to its capital market. The roadmap reveals that during the last quarter of 2019 and the first quarter of 2020, Nigeria’s Security and Exchange Commission (SEC) is expected to carry out the following:
- Issue guidelines and standards for whitepapers and ICOs.
- Decide on its preferred classification of cryptocurrencies (either as commodities, securities or currency).
- Develop a framework for the regulation of Virtual Financial Assets (VFAs) and VFA Exchanges.
- Define clear classification for tokens based on their unique properties. They could be payment tokens, asset tokens, utility tokens or others.
- Develop a framework for KYC and due diligence for cryptocurrencies, Virtual Financial Assets, tokens, and ICOs.
Cryptocurrencies as Securities or Commodities but not as Currency
SEC is being called upon to recognize cryptocurrencies as securities or commodities but not as currency. This is one of the outstanding recommendations from the roadmap that was prepared by a committee which was made up of highly competent officials from the regulatory agencies, the private sector, and a highly reputed member of the blockchain community. Note that this recommendation goes in line with the central bank’s directive which was issued last year saying that “virtual currencies” were not a legal tender for financial transactions.
Since their creation, cryptocurrencies or virtual currencies or digital currencies have lacked a single, which is its definite identity. A surface research in different countries that are using cryptocurrencies will greatly support this fact. For example, the US uses the Howey test to decide whether a cryptocurrency is a security or not while Germany uses cryptocurrencies as money and means of payment.