Blockchain and other distributed ledger technology have no doubt catalysed innovation in the financial markets, with cryptocurrency probably being the most commonly known innovation which leverages blockchain technology.
Cryptocurrency has gained the most significant traction with a global market valuation of about US$267 billion from inception. In Africa, monthly cryptocurrency transfers (in and out of the continent) of under US$10,000 was estimated to have reached US$316 million in June 2020, with a large portion of this reported to have come from Nigeria.
However, concerns about the inherent risks associated with digital assets have remained a hinderance to real growth, especially institutional participation, as Cryptocurrencies and other digital assets have been largely unregulated in many jurisdictions, including Nigeria.
Recently, the EU proposed full regulatory frameworks for cryptocurrencies in their regions while in the U.S, two new Bills are under consideration by lawmakers – the Digital Commodity Exchange Act, and the Securities Clarity Act.
In Nigeria, the Securities and Exchange Commission (SEC) on 14 September 2020 issued a Statement on Digital Assets and their Classification and Treatment. This newsletter analyses and provides clarity on the newly issued SEC Statement.