The Virtual Currency Regulation Review: Nigeria

Introduction to the legal and regulatory framework

There is currently no harmonised legal and regulatory framework regarding the status and treatment of virtual currencies and assets in Nigeria. The Central Bank of Nigeria (CBN) and the Securities and Exchange Commission, Nigeria (SEC) assert overlapping jurisdictions for market participants transacting in virtual currencies or other digital assets.

The CBN has indicated that the use in Nigeria of virtual currencies issued by unregulated and unlicensed entities is contrary to its mandate as the statutory issuer of legal tender in Nigeria.2 Defining cryptocurrencies as 'digital or virtual currencies issued by largely anonymous entities and secured by cryptography', and defining cryptography as 'a method of encrypting and hiding codes that prevent oversight, accountability and regulation', the CBN has declared that the use of cryptocurrencies in Nigeria is a direct contravention of existing law.3 The CBN has further directed the closure of all accounts owned by individuals or entities transacting in or operating cryptocurrency exchanges in Nigeria.4

In contrast, in its 'Statement On Digital Assets And Their Classification And Treatment' (the Statement),5 dated 14 September 2020, the SEC stated that virtual cryptoassets are securities that fall within the SEC's regulatory purview and it reiterated this stance in a press release on 11 February 2021.6 Furthermore, according to the SEC, all digital asset token offerings (DATOs), initial coin offerings (ICOs), security token ICOs and other blockchain-based offers of digital assets within Nigeria or by Nigerian issuers or sponsors, or foreign issuers targeting Nigerian investors, shall be subject to regulation by the SEC.

Notably, however, and in line with the CBN's stated position on cryptocurrencies,7 the SEC has suspended the admission to its Regulatory Incubation (RI) programme8 of all persons affected by the CBN directive until they are able to operate bank accounts within the Nigerian banking and financial system.

Securities and investment laws

The primary legislation for the regulation of the capital markets in Nigeria is the Investments and Securities Act 2007 (ISA). The ISA establishes the SEC as the main regulatory body in the Nigerian capital market.9 In line with its powers to make rules and regulations for the market, among other things,10 the SEC released the Securities and Exchange Commission Rules and Regulations 2013 (the SEC Rules), which supplement the ISA. The SEC regularly releases new regulations to supplement the SEC Rules.

The law in Nigeria (including the ISA and the SEC Rules) does not provide for the regulation of virtual currencies in Nigeria. The SEC, via the Statement, maintains its position that it will be taking a three-pronged approach to regulate innovation in the cryptocurrency sector; this approach includes safety, market deepening, and providing solutions to problems that will guide its regulations, strategy and interactions with innovators seeking legitimacy and relevance in this emerging industry. In the same Statement, the SEC indicated that it will regulate virtual assets when the character of the investment qualifies as securities.11 It is the position of the SEC that, unless proven otherwise by the issuer or sponsor, virtual cryptoassets are securities.

Furthermore, all DATOs, ICOs, security token ICOs and other blockchain-based offers of digital assets within Nigeria or by Nigerian issuers or sponsors or foreign issuers targeting Nigerian investors, shall be subject to regulation by the SEC.

According to the Statement, any person (individual or corporate) whose activities involve any aspect of blockchain-related and virtual digital assets services, including but not limited to reception, transmission and execution of orders on behalf of other persons, dealers on their own account, portfolio management, investment advice, custodian or nominee services, must be registered with the SEC.

The SEC currently recognises the following categories of virtual assets and instruments and provides for their treatment under the SEC Rules.

i Cryptoassets

The SEC has adopted a description of cryptoassets that describes them as 'a digital representation of value that can be digitally traded and functions as: a medium of exchange; and/or a unit of account; and/or a store of value, but which does not have legal tender status in any jurisdiction'. According to the SEC, a cryptoasset is neither issued nor guaranteed by any jurisdiction and fulfils the above-listed functions only by agreement within the community of cryptoasset users, and it is differentiated from fiat currency and 'e-money'.12

Cryptoassets are treated as commodities if traded on a recognised investment exchange or issued as an investment, whereby they are subject to Part E of the SEC Rules and any other relevant sections and subsequent rules.

ii Utility tokens or 'non-security tokens'

Utility tokens simply provide users with a product or service (e.g., virtual tokens). They are treated as commodities. However, spot trading and transactions in utility tokens do not fall under the SEC's purview unless conducted on a recognised investment exchange, whereby they would be subject to Part E of the SEC Rules and any other relevant sections and subsequent rules.

iii Security tokens

In the Statement, the SEC describes security tokens as virtual tokens that have the features and characteristics of a security that represents assets such as participations in real physical underlyings, companies or earnings streams or an entitlement to dividends or interest payments. In terms of their economic function, these tokens are analogous to equities, bonds, etc.

Security tokens are deemed to be securities as defined under the ISA.13 All financial services activities relating to security tokens such as: (1) operating primary or secondary markets; and (2) dealing, trading or managing investments in or advising on security tokens will be subject to the relevant regulatory requirements. In addition, market intermediaries and market operators dealing or managing investments in security tokens are required to be registered with and approved by the SEC as capital market operators, recognised investment exchanges or clearing houses, as applicable.

iv Derivatives and collective investment funds of cryptoassets, security tokens and utility tokens

A derivative is a contract, between two or more parties, whose value is based on an agreed-upon underlying financial asset, while a collective investment fund (also known as a collective investment trust) is a group of pooled accounts held by a bank or trust company for investors. These will be regulated as specified investments under the ISA and the SEC Rules, while market intermediaries and operators dealing in derivatives and collective investment funds of cryptoassets, security tokens and utility tokens will need to be registered and approved by the SEC.

Banking and money transmission

The Banking sector is primarily regulated by CBN.14 According to the CBN, cryptocurrencies are issued by unregulated and unlicensed entities, and their use in Nigeria runs counter to the mandate of the CBN as the issuer of legal tender in Nigeria pursuant to the CBN Act 2007.15

The CBN, in its circular dated 12 January 2017 (the CBN Circular), stated that in the absence of substantive regulation or a decision by the CBN, all banks and other financial institutions in Nigeria should ensure that they do not use, hold, trade or transact in any way in virtual currencies.16 The CBN also stated in the CBN Circular that virtual currencies are not legal tender in Nigeria, therefore, any bank or financial institution that transacts in virtual currency business does so at its own risk. Further to the CBN Circular, via a letter dated 5 February 2021 (the CBN Letter), the CBN issued a reminder to all deposit money banks (DMBs), non-bank financial institutions (NBFIs) and other financial institutions (OFIs) that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited. The CBN further directed the closure of all accounts owned by individuals or entities transacting in or operating cryptocurrency exchanges in Nigeria.17

It should be noted that the CBN Circular and CBN Letter do not ban outright trading in virtual currencies. The effect of the CBN directives, however, is that persons or entities in Nigeria cannot facilitate the trade or transmission of virtual currencies through the Nigerian financial system.

Anti-money laundering

The main legislation governing money laundering in Nigeria is the Money Laundering (Prohibition) Act 2011 (as amended) (MLPA). The CBN released the CBN (Anti-money Laundering and Combating the Financing of Terrorism in Banks and Other Financial Institutions in Nigeria) Regulations 2013 (the CBN AML/CFT Regulations) to regulate financial institutions under its regulatory purview and the SEC also released the SEC (Capital Market Operators Anti-Money Laundering and Combating the Financing of Terrorism) Regulations 2013 (the SEC AML/CFT Regulations). The MLPA, the CBN AML/CFT Regulations and the SEC AML/CFT Regulations neither envisage nor treat directly the use of virtual currencies for money laundering activities.

Financial institutions (FI) under the MLPA are defined as:

banks, body corporates, associations or group of persons, whether corporate or incorporate which carries on the business of investment and securities, a discount house, insurance institutions, debt factorisation and conversion firms, bureau de change, finance company, money brokerage firm whose principal business includes factoring, project financing, equipment leasing, debt administration, fund management, private ledger service, investment management, local purchase order financing, export finance, project consultancy, financial consultancy, pension funds management and such other business as the Central Bank, or other appropriate regulatory authorities may from time to time designate

Under the MLPA, designated non-financial institutions (DNFIs) are defined as:

dealers in jewellery, cars and luxury goods, chartered accountants, audit firms, tax consultants, clearing and settlement companies, legal practitioners, hotels, casinos, supermarkets, or such other businesses as the Federal Ministry of Trade and Investment or appropriate regulatory authorities may from time to time designate.

As virtual currency exchanges do not currently fall within the definition of FIs and DNFIs under the MLPA,18 they are not bound by the requirements of the MLPA as it relates to FIs and DNFIs, including the fulfilment of the know-your-customer (KYC) requirements.19

The definitions of FIs and DNFIs under the MLPA also include such other business as the CBN or other appropriate authority may designate from time to time.20 In the event that virtual currency exchanges are subsequently categorised as either FIs or DNFIs by the CBN or other appropriate authorities, the provisions of the MLPA and AML/CFT Regulations will apply to them.

In the CBN Circular, the CBN expressed the need to protect the integrity of the Nigerian financial system and address the money laundering and terrorism financing risks associated with virtual currency exchanges and any other types of institutions that act as nodes, where convertible virtual currency activities intersect with the regulated fiat currency financial system.21 According to the CBN, this is one of the reasons for directing banks and other financial institutions not to hold, trade or transact in any way with virtual currencies. Another primary risk noted by the CBN, which is similar to that identified by other regulators around the globe, is the anonymous and pseudo-anonymous nature of cryptocurrencies.

In the CBN Circular, the CBN directed banks and other financial institutions to:

  1. ensure that existing customers that are virtual currency exchanges have effective AML/CFT controls to enable them to comply with customer identification, verification and transaction monitoring requirements;
  2. discontinue any relationship with virtual currency exchanges or customers where the banks or other financial institutions are not satisfied with the controls put in place by the virtual exchanges concerned; and
  3. report to the Nigerian Financial Intelligence Unit any suspicious transactions by virtual currency exchanges or customers.

Notwithstanding the above AML/CFT requirements for virtual currency exchanges and customers, the CBN, via the CBN Letter, directed all DMBs, NBFIs and OFIs to identify all persons and entities transacting in or operating cryptocurrency exchanges within their systems and to ensure that those accounts were closed immediately. This has had the effect of holding in abeyance the responsibility previously placed on financial institutions to ensure AML/CFT controls in relation to customers of this kind, until such time as the CBN lifts its prohibition and cryptocurrency exchanges are allowed to access the Nigerian financial system.

The SEC AML/CFT Regulations apply to capital market operators, money laundering activities in the Nigerian capital market and other related matters. The SEC AML/CFT Regulations define a capital market operator as any person (individual or corporate) duly registered with the SEC to perform specific functions in the capital market.

As and when virtual currency operators (individual or corporate) can operate accounts within the Nigerian financial system and can then be registered with the SEC, they will be required to fulfil the KYC requirements and other reporting requirements in the regulations that apply to capital market operators. In addition, they are likely to be categorised as FIs to the extent that they will be carrying on the business of investments and securities. Therefore, they will be bound by the KYC requirements under the MLPA at that time.

Regulation of exchanges

Discussing the regulation of virtual currency exchanges is premature in view of the conflicting positions of the CBN and the SEC on virtual currencies.

The operations of virtual currency exchanges will ordinarily be regulated by the SEC. The Statement provides that market intermediaries and market operators, such as recognised securities or investment exchanges,22 dealing or managing investments in security tokens, derivatives and collective investment funds of cryptoassets, security tokens and utility tokens are required to be registered and approved by the SEC.

The registration requirement for securities exchanges as provided in Part E of the SEC Rules will apply to virtual currency exchanges. This includes a formal application to the SEC filed on Form SEC 5 and accompanied by the following documents:23

  1. a copy of the certificate of incorporation of the virtual currency exchange certified by the company secretary;
  2. two copies of the memorandum and articles of association and amendments (if any) of the virtual currency exchange certified by the Corporate Affairs Commission;
  3. the latest copy of the audited accounts or statement of affairs of the virtual currency exchange signed by its auditors, and management accounts that are not more than 30 days old at the time of filing with the SEC;
  4. two copies of existing or proposed by-laws or rules, code of conduct, code of dealing, etc., which are referred to as 'rules of the exchange';
  5. two copies of the listing requirements of the virtual currency exchange;
  6. a sworn undertaking to promptly furnish the SEC with copies of any amendments to the rules of the exchange and the listing requirements;
  7. information relating to market facilities;
  8. detailed information about the trading system to be adopted;
  9. information as to its organisation, including its structure and profiles of members of its council or board, as well as rules and procedures;
  10. instruction and inspection manual of members activities;
  11. detailed information about the promoters and principal officers of the exchange;
  12. a sworn undertaking to keep such records and render such returns as may be specified by the SEC from time to time;
  13. a sworn undertaking to comply with and to enforce compliance by its members with the provisions of the ISA and the SEC Rules;
  14. an application for registration of at least three principal officers of the virtual currency exchange;
  15. a minimum paid-up capital requirement of 500 million naira; and
  16. any other document required by the SEC from time to time for the protection of investors.

It is imperative to note that while virtual currency exchanges are to be regulated by the SEC, the CBN directive to all DMBs, NBFIs and OFIs to close all accounts owned by individuals or entities transacting in or operating cryptocurrency exchanges in Nigeria means they are unable to operate within the Nigerian financial system. Accordingly, the SEC has suspended the admission into the SEC Regulatory Incubation programme of all persons affected by the CBN's position on virtual currencies, until they are able to operate bank accounts within the Nigerian banking and financial system in accordance with the CBN directive.

Some users of virtual currency exchanges in Nigeria have moved to peer-to-peer exchange platforms in Nigeria to continue trading, and these are not within the regulatory purview of the SEC.

It is also imperative to note that trading platforms that do not deal with members of virtual currency exchanges but facilitate the purchase and sale of virtual currencies will be required to register with the SEC as a sub-broker or sub-broker serving multiple brokers through a digital platform.

In its recent amendments to the SEC Rules on 22 April 2021 (the Amendments), the SEC expanded the definition of sub-brokers to include 'any person or entity which is not a dealing member of an exchange and acts on behalf of a sponsoring broker/dealer as an agent or otherwise for assisting the investor in buying, selling or dealing in securities through such sponsoring broker/dealer'. As well as corporate and individual sub-brokers, the Amendments also include a new category referred to as 'sub-brokers serving multiple brokers through a digital platform'. This is defined as 'a sub-broker who utilises a digital platform to serve clients and interact with the sponsoring broker or brokers'.

As part of the registration requirements, these platforms are, among other things, required to have:

  1. a minimum paid-up capital of 10 million naira;
  2. a fidelity insurance bond to the value of at least 20 per cent of the minimum paid-up capital;
  3. a copy of a 'multiple principal agreement' with every sponsoring broker;
  4. a description of the technology on which its infrastructure is built;
  5. certification by an IT service provider registered with the National Information Technology Development Agency or other recognised agency that the infrastructure is sufficient to perform the required function, and endorsed by a representative of the Association of Securities Exchanges; and
  6. evidence of documented policies and procedures for managing technology risks.

Upon registration and pursuant to the provisions of Rule 68 of the SEC Rules, the platforms operating as sub-brokers or sub-brokers serving multiple brokers through a digital platform will be able to perform the following functions only through their sponsoring broker or dealer:

  1. purchase of securities;
  2. sale of securities;
  3. receiving payments from clients in relation to (a) and (b);
  4. making payments to clients in relation to (a) and (b); and
  5. other services ancillary to points (a) to (d).

Regulation of miners

There is no specific regulatory regime that captures the activities of miners in Nigeria. However, any person (individual or corporate) whose activities involve any aspect of blockchain-related and virtual digital asset services24 are required to be registered with the SEC and are subject to the regulatory guidelines prescribed by the SEC.

Given that virtual currencies that are mined are likely to be cryptocurrencies (or other types of virtual currencies), the activities of miners will be deemed to be subject to the regulatory purview of the SEC. The category of licence to be issued to miners is, however, unclear under the current legal and regulatory framework, as they are neither issuers nor sponsors.

Regulation of issuers and sponsors

The activities of issuers and sponsors of virtual currencies in Nigeria are not regulated by the CBN. This may be because the CBN has not yet accepted or endorsed this form of currency as valid legal tender in Nigeria.

Notwithstanding the above, the SEC has declared that any individual or corporate entity whose activities involve any aspect of blockchain-related and virtual digital asset services25 must be registered with the SEC and shall be subject to the regulatory oversight of the SEC.26 Additionally, all issuers or sponsors (either start-ups or existing corporations) of virtual digital assets shall be guided by and comply with the SEC Rules and regulations.27

Furthermore, a foreign or non-residential issuer or sponsor may be required to establish a branch office within Nigeria. However, foreign issuers or sponsors will be recognised by the SEC where a reciprocal agreement exists between Nigeria and the country of the foreign issuer or sponsor.28

Criminal and civil fraud and enforcement

There are currently no civil or criminal legislation that specifically regulate the issuance or trading of virtual currencies in Nigeria. However, virtual currency transactions will be subject to the existing general criminal and civil laws. Therefore, any party that commits any civil or criminal fraud involving virtual currencies would be subject to existing laws.

The uniqueness of virtual currency can lead to unique ways in which virtual currency investors can be defrauded. Crypto-Ponzi schemes are prevalent in Nigeria. Victims of fraudulent schemes of this kind are not, however, without recourse to methods to recover their investments. Section 419 of the Criminal Code and Section 320 of the Penal Code criminalise obtaining by any false pretence from any other person, and with intent to defraud, anything capable of being stolen, or inducing any other person to deliver to any person anything capable of being stolen. Persons who operate fraudulent virtual currency schemes and who solicit money from the public would be liable under the relevant provisions of the Criminal Code or Penal Code.

The Nigerian government has expressed concern over the possible use of virtual currencies to conceal criminal proceeds. This was one of the justifications stated by the CBN for directing the closure of bank accounts of cryptocurrency operators. Section 15 of the MLPA makes it an offence for any person or body corporate, in or outside Nigeria, to directly or indirectly conceal the origin, transfer, remove from the jurisdiction, acquire or use any fund or property that was known or ought to have been known to have been obtained through an unlawful act. Therefore, transfer or concealment of funds from unlawful acts through virtual currency would arguably be classified as a money laundering offence. Section 18 of the Economic Financial Crime Commission Act contains similar provisions as it relates to funds or property from proceeds of financial crimes covered by the Act.

The Federal Competition and Consumer Protection Act 2018 (FCCPA) protects consumers of goods and services in Nigeria against unfair business practices, including misrepresentation of material facts in the marketing of goods or services.29 The FCCPA defines a consumer as including any person to whom a service is rendered,30 which may cover individuals receiving the services of virtual currency operators in Nigeria. As such, a customer might have recourse under the FCCPA for damage suffered because of misleading representations by a virtual currency operator.

In addition, further to the CBN Letter, any financial institution that allows an individual or entity transacting in or operating virtual currency exchanges to operate accounts within its system is likely to attract regulatory sanctions from the CBN.

Tax

There is no specific Nigerian legislation that regulates the tax treatment of transactions involving virtual currencies. However, such transactions will be subject to the existing general tax laws within the country, which means that any income or profit made from investments of this kind are taxable in the hands of the investors.

This will mean that individuals will be liable to pay personal income tax on any profit earned from such transactions,31 while a corporate entity, if medium-sized,32 will be liable to pay company income tax at the rate of 20 per cent of its taxable income or, if a large company,33 30 per cent of its taxable income,34 However, because of the very nature of cryptocurrency, it will be difficult for the tax authorities to determine and track any gains on such investments.35

Other issues

Data protection

The Nigeria Data Protection Regulation 2019 (NDPR) has various implications for the storage and processing of personal data associated with virtual currency transactions.

The NDPR provides that individuals have a right to request erasure of, or the rectification of inaccuracies in, their personal data.36 However, the decentralised and immutable nature of virtual currencies as blockchain-based creations poses an obstacle to the execution of this right and might make this right functionally impossible to exercise. Technical or practical solutions may be needed to facilitate the erasure or rectification of personal data to ensure compliance with NDPR provisions.

Looking ahead

i Unified legal framework for virtual currencies

There are ongoing efforts by the CBN, the SEC and other regulators to establish a unified regulatory framework for virtual currencies in Nigeria.37 Following the engagement of the regulators, it is expected that a harmonised regulatory framework for the treatment and use of the virtual currencies in Nigeria will be issued.

ii Introduction of a national digital currency

As part of its ongoing efforts to regulate virtual currencies, the CBN is preparing a digital currency pilot that is scheduled to launch in 2021.38 The CBN is also exploring technological options and engaging various industry participants and will move to the next stage of proof of concept to pilot the digital currency scheme.

iii SEC Regulatory Incubation programme

The SEC recently announced the imminent roll-out of the SEC Regulatory Incubation (RI) programme for fintech companies operating or seeking to operate in the Nigerian capital market, and which is expected to kick-start in the third quarter of 2021.39 The programme is designed to address the needs of new business models and processes that require regulatory authorisation to continue carrying out full ancillary technology-driven capital market activities. The RI programme is an interim measure to aid the evolution of effective regulation that accommodates innovation by fintech companies without compromising market integrity, while also remaining within limits that ensure investor protection.

The RI requirement applies to fintech entrepreneurs seeking registration whose functions and operations have been reviewed and deemed to require an amendment to the existing SEC Rules or the creation of completely new rules.40

As a pre-qualification requirement, the activity to be carried out by an applicant must fall within the scope of the activities regulated by the SEC.41 Fintech companies involved in any aspect of blockchain-related services and virtual digital asset services are eligible to apply for the RI programme provided that:42

  1. they use innovative technology to offer a new type of product or service, or apply innovative technology to an existing product or service;
  2. the business involves an activity that is a financial service carried on in and from Nigeria;
  3. they are ready to commence operating with live customers and operate within the purview of the SEC regulatory framework;
  4. they shall commit to applying for registration as soon as rules are provided by the SEC;
  5. the product or service they seek to offer addresses a problem (compliance or supervision)or brings potential benefits to customers or industry;
  6. they ensure that the product is safe for investors; and
  7. they complete the SEC fintech assessment form and discuss the proposal with the SEC at an early stage.

However, in accordance with the CBN Letter, the SEC suspended admission to the RI programme for persons or entities transacting or operating in cryptocurrency exchanges.

iv Conclusion

Nigeria is one of the largest cryptocurrency markets in the world, accounting for cryptocurrency transactions worth US$566 million in five years.43 There are several use case arguments that can be made to demonstrate the importance of virtual currencies in Nigeria, including their use in value preservation or to hedge against inflation, in cross-border payments and remittances, and in digital payments. Additionally, the increasing price and value of cryptocurrencies (especially Bitcoin and to a lesser extent Ethereum) make it an attractive investment option, and a number of Nigerian cryptocurrency start-ups act as local exchanges to facilitate transactions among their users.

In view of the above, it is expected that the regulators will take more active steps towards the development of a comprehensive legal and regulatory framework for virtual currencies in Nigeria.

Footnotes

1 Chukwudi Ofili is a partner, Kofoworola Toriola and Chizotam Akwiwu are associates and Timiebi Edo is a solicitor at Detail Commercial Solicitors.

2 Central Bank of Nigeria Act 2007 S2(b).

3 Central Bank of Nigeria (CBN), 'Response to Regulatory Directive on Cryptocurrencies' (press release, 7 February 2021), https://www.cbn.gov.ng/Out/2021/CCD/CBN%20Press%20Release%20Crypto%2007022021.pdf.

4 CBN, 'Letter to all Deposit Money Banks, Non-Bank Financial Institutions and Other Financial Institutions' (circular, 5 February 2021), https://www.cbn.gov.ng/Out/2021/CCD/Letter%20on%20Crypto.pdf.

5 Securities and Exchange Commission, Nigeria (SEC), 'Statement On Digital Assets And Their Classification And Treatment' (circular, 14 September 2020), https://sec.gov.ng/statement-on-digital-assets-and-their-classification-and-treatment.

6 SEC, 'Press Release on Cryptocurrencies' (press release, 11 February 2021), https://sec.gov.ng/press-release-on-cryptocurrencies.

7 SEC, 'Press Release on Cryptocurrencies' (see footnote 6).

8 The Regulatory Incubation programme sets out basic requirements for fintech firms to operate under prescribed, but limited, provisions for a specified period.

9 Section 13 of the Investment Securities Act (ISA) confers on the SEC powers to regulate investments and securities business in Nigeria.

10 Section 4 ISA.

11 SEC, 'Statement On Digital Assets And Their Classification And Treatment' (see footnote 5).

12 ibid.

13 According to Section 315 ISA:

'securities' means –
(a) debentures, stocks or bonds issued or proposed to be issued by a government;
(b) debentures, stocks, shares, bonds or notes issued or proposed to be issued by a body corporate;
(c) any right or option in respect of any such debentures, stocks, shares, bonds or notes; or
(d) commodities futures, contracts, options and other derivatives, and the term securities in this Act includes those securities in the category of the securities listed in (a)–(d) above which may be transferred by means of any electronic mode approved by the Commission and which may be deposited, kept or stored with any licensed depository or custodian company as provided under this Act.

14 Section 2 of the Central Bank of Nigeria Act 2007 establishes the objectives of the CBN, which include issuing legal tender currency in Nigeria and promotion of a sound financial system.

15 CBN, 'Response to Regulatory Directive on Cryptocurrencies' (see footnote 3).

16 CBN, 'Circular to Banks and Other Financial Institutions on Virtual Currency Operations in Nigeria' (circular, 12 January 2017), https://www.cbn.gov.ng/out/2017/fprd/aml%20january%202017%20circular%20to%20fis%20on%20virtual%20currency.pdf.

17 CBN, 'Letter to all Deposit Money Banks, Non-Bank Financial Institutions and other Financial Institutions', https://www.cbn.gov.ng/Out/2021/CCD/Letter%20on%20Crypto.pdf.

18 Section 25 of the Money Laundering (Prohibition) Act 2011 (as amended).

19 Section 3 of the Money Laundering (Prohibition) Act 2011 (as amended).

20 Section 25 of the Money Laundering (Prohibition) Act 2011 (as amended).

21 CBN, 'Response to Regulatory Directive on Cryptocurrencies' (see footnote 3).

22 According to Section 315 ISA:

'securities exchange' means an exchange or approved trading facility such as a commodity exchange, metal exchange, petroleum exchange, options, futures exchanges, over the counter market, and other derivatives exchanges

23 Section 182 ISA.

24 Such services include, but are not limited to, reception, transmission and execution of orders on behalf of other persons, dealers on their own account, portfolio management, investment advice, custodian or nominee services.

25 SEC, 'Statement on Digital Assets and their Classification and Treatment' (see footnote 5).

26 ibid.

27 ibid.

28 SEC, 'Statement on Digital Assets and their Classification and Treatment' (see footnote 5).

29 Section 125(1) of the Federal Competition and Consumer Protection Act 2018.

30 Section 167 of the Federal Competition and Consumer Protection Act 2018.

31 Sections 1 and 3(1)(b) of the Personal Income Tax Act Cap P8 LFN 2004 (as amended by the Finance Act 2020).

32 Section 105(1)(c) of the Companies Income Tax Act Cap C21 LFN 2004 (as amended by the Finance Act 2020) (CITA) defines a medium-sized company as a company that earns gross turnover greater than 25 million naira but less than 100 million naira.

33 Section 105(1)(c) CITA (as amended by the Finance Act 2020) defines a large company as a company that is not a small or medium-sized company. A small company means a company that earns gross turnover of 25 million naira or less.

34 Section 40(b) and (c) CITA (as amended by the Finance Act 2020).

35 Blackwood Stone Tax Law Firm, 'The Need for Regulations Governing the Taxation of Cryptocurrency in Nigeria' (19 February 2018), https://blackwoodstone.com/the-need-for-regulations-governing-the-taxation-of-cryptocurrency-in-nigeria-introduction.

36 Section 3.1(7)(h), Paragraph 3.1 of the Nigerian Data Protection Regulations 2019. Personal data means any information relating to an identified or identifiable natural person.

38 Michael Ajifowokew, 'Nigeria's Central Bank to launch digital currency before 2022' (11 June 2021), https://techcabal.com/2021/06/11/nigeria-to-pilot-official-digital-currency-before-2022.

39 SEC, 'Circular on the SEC Regulatory Incubation Program' (circular, 16 June 2021), https://sec.gov.ng/circular-on-the-sec-regulatory-incubation-program.

40 SEC Regulatory Incubation Guidelines for Specific Category of Fintech Entrepreneurs, https://sec.gov.ng/wp-content/uploads/2021/06/SEC-Regulatory-Incubation-Guidelines_18521.pdf.

41 Section 1 of the SEC Regulatory Incubation Guidelines.

42 ibid.

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