Nigeria -- Securities Classification Regulatory Overview

Nigeria's Securities and Exchange Commission (SEC) classifies cryptocurrency tokens as securities if they qualify under the statutory definition in Part XVIII (Section 315) of the Investments and Securities Act (ISA), presuming virtual crypto assets are securities unless proven otherwise by the issuer.[2][3]

Legal Test Used

The SEC applies the ISA's broad definition of securities, which includes instruments representing participation in assets, companies, earnings streams, or entitlements to dividends/interest (analogous to equities or bonds), rather than a direct equivalent to the U.S. Howey test.[1][2][3] Issuers bear the burden of proof to demonstrate a token is not a security.[2][3]

Tokens Considered Securities

• Security Tokens: Deemed securities under ISA Part XVIII (315); exhibit features like equity/bond characteristics.[2][3]
• Crypto Assets (e.g., non-fiat virtual currencies): Treated as commodities if traded on a Recognized Investment Exchange or issued as investments; otherwise presumed securities.[1][2][3]
• Utility Tokens: Treated as commodities; spot trading exempt from SEC unless on a Recognized Investment Exchange.[1][2]
• Derivatives/Collective Investment Funds of the above: Regulated as specified investments under ISA and SEC Rules.[2][3]

Registration/Exemption Requirements for Token Issuers

Security Token ICOs, blockchain-based offers in Nigeria, by Nigerian issuers, or targeting Nigerians require SEC registration/approval.[3] Issuers must file initial assessments or full registration documents; existing offerings (pre-guidelines) had 3 months to comply.[3] Market intermediaries/operators need SEC approval as Capital Market Operators (CMOs), Recognized Investment Exchanges, or Clearing Houses.[2][3] Virtual Asset Service Providers (VASPs) must register, meet capital requirements (e.g., ₦1,000,000 for custodians), and implement KYC/AML.[4][5]

Secondary Trading Rules

Primary/secondary markets, dealing, trading, investment management, or advising on security tokens require SEC regulatory compliance and operator registration/approval.[2][3] Spot trading in utility tokens/crypto is unregulated unless on Recognized Investment Exchanges (then subject to Part E of SEC Rules).[1][2]

Enforcement Examples

Search results provide no specific enforcement cases; regulation emphasizes proactive registration and compliance rather than documented actions.[1][2][3][4][5]

Specific Legislation and Regulatory Guidance

• Investments and Securities Act (ISA), Part XVIII (Section 315): Defines securities.[2][3]
• SEC Rules and Regulations, Part E: Covers commodity treatment on exchanges.[1][2]
• Key Guidance: SEC Statement on Digital Assets and Their Classification and Treatment[3]; SEC Statement Webpage[2].