Last Updated on May 2, 2023 by Bitfinsider

Nigeria’s Securities and Exchange Commission is testing digital exchange applications in order to increase market participation in Africa’s most populous country, where the central bank forbids cryptocurrency trading.

The Securities and Exchange Commission (SEC) is considering allowing tokenized coin offers on regulated digital exchanges that are backed by assets such as equities, debt, and property but “not crypto,” according to Abdulkadir Abbas, head of securities and investment services at the Abuja-based commission, in an interview in Lagos. “As a regulator, we always like to start with a very simple clear proposal before we go into the complex ones.”

The initiative may entice digitally aware people in a country of more than 200 million — with 43% of the population under 14 — to invest in local assets such as shares, which have been avoided for years. According to Paxful, a now-defunct exchange, the West African country accounted for the highest volume of bitcoin transactions outside of the United States.

The Nigerian Securities and Exchange Commission (SEC) intends to register fintech firms as digital sub-brokers, crowd-funding intermediaries, robo-advisors, fund managers, and tokenized coin issuers; however, it will not register crypto exchanges until there is agreement on standards with the central bank, which ordered commercial lenders not to facilitate the transactions in 2021.

Intending digital exchanges will go through a year of “regulatory incubation” during which they will only offer skeletal services supervised by the SEC in order to investigate the pattern of their operations and fitness to render the services in the country, according to Abbas. “By the 10th month, we should be able to decide whether to register the firm, extend the incubation period, or even request that the firm cease operations.”