This is a breakdown of the Final Report of the Fintech Roadmap Accepted by the Capital Markets community which specifies Cryptocurrencie as Commodities or Securities NOT currency.
The report was presented by Fintech Association of Nigeria to Nigeria’s Securities Exchange Commission at the second Capital Market Committee Meeting for the year 2019.
Below is a breakdown report of the regulatory recommendations and it’s advantages to blockchain startups, fintechs and the cryptocurrency community.
Crypto-Currencies, Virtual Financial Assets (VFA) and ICOS:
- SEC should specify the type of classification of crypto-currencies (either as Commodities, Securities or Currency). The chosen classification should be Commodities or Securities but NOT as a Currency.
- SEC should regulate Virtual Financial Assets Exchanges and develop a framework for it.
- Interest based crowdfunding should be regulated by the Central Bank of Nigeria (CBN) while equity-based crowdfunding should be regulated by the SEC (ICO, STO or IPOs).
- SEC should issue guidelines and standards for White Papers and ICOs.
On making the regulatory laws easy for blockchain startups like BitSika, Farmchain, TrusteeFarm, Abitnetwork, WiCrypt and others. The FinTech report recommends a less ambiguous Advertising and issuance procedures.
Going further, the report recommends the creation of appropriate licensing regimes for new entrants into the crowdfunding ecosystem by SEC.
And also develop a detailed framework for VFA based economy. This will help create a clear taxonomies of tokens based on their nature, characteristics and economic realities as it’s determining factors.
The report also recommends Anti-Money Laundering (AML) and Know Your Customer (KYC) Procedures by SEC. This it said, will help develop a stringent framework for KYC and due
diligence which will apply notwithstanding the legal status of an ICO or token..
Furthermore, the taxonomy of traditional securities should not be tampered with. It should serve as a useful framework for the taxonomization of the new
cryptocurrency capital market, investment products and services.
The report also encourged SEC to implement the best international standards in ICO regulations with reference to the Malta ICO Guide. The recommended Malta Guide broadly taxonomises tokens as:
- Payment token
- Asset token
- Utility token
This will help in creating a favourable environment for the growth of the blockchain tech-based industries, fintechs and blockchain startups in Nigeria.
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