Cryptocurrency
SEC proposes rules regulating Blockchain and Crypto investments
Crypto enthusiast believes SEC new rules will act as a catalyst for mass adoption.
The Securities and Exchange Commission (SEC), has proposed a new set of rules that will regulate Crypto-token or Crypto-coin investments when the character of the investments qualifies as securities transactions.
What will be regulated
- The position of the Commission is that virtual crypto assets are securities unless proven otherwise. Thus, the burden of proving that the crypto assets proposed to be offered are not securities, and therefore not under the jurisdiction of the SEC, is placed on the issuer or sponsor of the said assets.
- Issuers or sponsors are expected to satisfy the burden of proving that the virtual assets do not constitute securities, by making an initial assessment filing. However, where the finding of the Commission is that the virtual assets are indeed securities (not structured to be exclusively offered through crowdfunding portals or other exempt methods), then the issuer or sponsor must register the digital assets.
- The registration process for virtual assets will involve a two-pronged approach – an initial assessment filing to satisfy the burden of proof, and a filing for registration proper, either made directly by the issuer or sponsor, where the burden of proof is not satisfied.
- Similarly, all Digital Assets Token Offering (DATOs), Initial Coin Offerings (ICOs), Security Token (ICOs), and other Blockchain-based offers of digital assets within Nigeria, or by Nigerian issuers, sponsors, or foreign issuers targeting Nigerian investors, shall be subject to the regulation of the Commission. Existing digital assets offerings prior to the implementation of the regulatory guidelines will have three (3) months to submit the initial assessment filing of documents for registration proper, as the case may be.
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What it means: In an exclusive interview with Nairametrics, Chimezie Chuta, Founder, Blockchain Nigeria User Group, spoke with excitement on the long-overdue legal framework by the Nigerian Securities Exchange Commission regulating digital assets and blockchain investments.
“SEC Nigeria has consistently shown that it has a clear understanding of her role in creating a conducive environment for the growth and development of Virtual Financial Assets, and Cryptocurrencies in general. This recent publication will act as a catalyst for mass adoption. It will also create the much needed institutional investor confidence for the Nigeria Capital Market.”
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Who will be regulated
- Any person (individual or corporate), whose activities involve any aspect of Blockchain-related and virtual digital asset services, must be registered by the Commission and will be subject to the regulatory guidelines. Such services include, but are not limited to reception, transmission, and execution of orders on behalf of other persons, dealers on own account, portfolio management, investment advice, custodian, or nominee services.
- Issuers or sponsors (start-ups or existing corporations) of virtual digital assets shall be guided by the Commission’s regulation. The Commission may require Foreign or non-residential issuers or sponsors, to establish a branch office within Nigeria. However, foreign issuers or sponsors will be recognized by the Commission, where a reciprocal agreement exists between Nigeria and the country of the foreign issuer or sponsor.
- A recognition status will also be accorded, where the country of the foreign issuer or sponsor is a member of the International Organization of Securities Commissions (IOSCO).
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For these reasons, the Commission has adopted the following with respect to virtual Crypto Assets
- Crypto Asset means a digital representation of value that can be digitally traded and functions as a medium of exchange, unit of account, and/or a store of value, but does not have legal tender status in any jurisdiction.
- Crypto Asset is neither issued nor guaranteed by any jurisdiction, and fulfills the above functions only by agreement within the community of users of the Crypto Asset, and distinguished from Fiat Currency and E-money.
Cryptocurrency
Nigerians bypassing bank transfers with crypto
Experts give vital insights to why Nigerians are fast adopting crypto, and the advantages crypto assets bring.
The high penetration of mobile phone usage in most African countries, particularly in Nigeria, has resulted in the rise of remittance rates and payments for goods and services. According to the World Bank, Africa’s largest economy is one of the six largest recipients of remittances in the world, attracting $24 billion in 2019, which made up 5% of the country’s GDP.
The financial market turmoil triggered by COVID-19 has definitely changed the way Nigerians view the whole financial system, as data also obtained from Google trend, shows Nigeria leading the pack around the world in Bitcoin searches.
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So, it not surprising that a significant number of young Nigerians, and small business owners avoid Nigerian banks, because of their stringent capital controls on outflows, relatively high transaction costs, and inflexible exchange rate system. However, in the crypto-verse, an entity can move over $250,000, with a transaction charge of less than $5, that can be received in minutes anywhere in the world.
Jens Ischebeck, a renowned Fintech publisher, in a note shared with Nairametrics, gave vital insights on why Africans are fast adopting crypto, and the advantages that crypto assets bring:
“Most African citizens have started shifting their hopes to the use of crypto, to escape numerous constraints faced with the traditional money transfer services, including cost, speed, and inconveniences.
READ: Ripple reports 1,760% surge in XRP sales in Q2 2020
“The main benefit is the overall lower cost to the end customer, which allows migrant workers to send substantial amounts of money to their loved ones in their home countries, at fairer prices. Also, there is a high unpredictability in the local currencies in most African countries; for instance, when South African rand became a volatile currency, most people switched to crypto, to seek security.
“The transaction is safe, and the companies don’t hold the virtual currency for more extended periods; thus, the operation takes a short time.”
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Recent statistics obtained from Useful Tulips, a BTC analytic data provider, stated that Nigeria leads Africa Bitcoin’s peer to peer lending in 2020, posting weekly P2P volumes of about $8 million, followed by South Africa and Kenya posting about $2 million weekly.
Nena Nwachukwu, Nigeria’s Regional Manager at Paxful, in an exclusive interview with Nairametrics, spoke on why many Nigerians are now turning to crypto as the viable option for transactions and store of value.
“This year, Cryptocurrency popularity and usage by Nigerians have grown by leaps and bounds. With the COVID-19 pandemic and CBN’s Naira devaluation, more people are actively searching for means to secure their wealth.
READ: Investor moves $133 million worth of Bitcoins, suspected from Coinbase
“As traditional investment tools like Real Estate, Stocks, Treasury bills etc. are too complicated to understand & acquire, Crypto-currency is the next best choice as it is very easy to access from any internet-enabled device.
“According to a recent Crypto Adoption Index report published by Chainanalysis, Nigeria currently ranks number 8 out of 154 countries in the use of Cryptocurrency; this comes as no surprise considering the urgent need for Nigerians to protect the value of their money.”
She also spoke on the high intellectual know-how, many Nigerian millennials have on using crypto.
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“Our Nigerian customers are also very knowledgeable and have evolved from using crypto/Bitcoin as only a form of speculative investment to making online payments, cross-border remittances, freelancer payments, and E-Commerce.
“With our second cryptocurrency (Tether USDT, a stablecoin pegged to the US Dollar) our customers are learning to further secure their Bitcoins from volatility, by converting BTC to USDT and lock its fiat value.”
It’s fair to say that the present complexity prevalent in Africa’s banking industry or arbitrary misappropriation of capital by some African governments has made young African millennials attracted to the most disruptive financial asset in the modern era.
Cryptocurrency
Ripple opens 1,000,000,000 XRP
Ripple unlocked 1 billion XRP worth over $240 million, from an escrow account.
Ripple (XRP), which is now the third most valuable crypto asset by market capitalization, recently unlocked 1 billion XRP, worth over $240 million, from an escrow account.
Whale Alert, an advanced crypto tracker, monitored this movement, revealing it occurred in two different 500 million XRP transactions, in real-time.
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🔓 🔓 🔓 🔓 🔓 🔓 🔓 🔓 🔓 🔓 500,000,000 #XRP (121,354,837 USD) unlocked from escrow at Ripple Escrow wallet
— Whale Alert (@whale_alert) October 1, 2020
🔓 🔓 🔓 🔓 🔓 🔓 🔓 🔓 🔓 🔓 500,000,000 #XRP (121,331,788 USD) unlocked from escrow at Ripple Escrow wallet
— Whale Alert (@whale_alert) October 1, 2020
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It then set up a plan to release about 1 billion XRP monthly for sale to be used as funding for its operations, and to invest in startups of interest, with the rest kept back in the escrow accounts.
What this means: In simple terms, the implication of this is more liquidity in the Ripple network, as more investors will now have access to those XRP.
READ: DeFi crypto market value gains over 1000% from June
Ripple’s concept involves releasing 1 billion XRP monthly to be sold in order to fund its payments platform maintenance and to invest in aspiring startups.
What you should know: Ripple is a privately-held fintech company that provides a global payment solution via its patented payment network called Ripple Network (also known as RippleNet).
- XRP is the digital token that has a circulating supply of 45 billion coins and a max supply of 100 billion coins.
- XRP still remains the only crypto gaining traction among global banks as Japan-based Mitsubishi UFJ Financial Group, with assets of more than USD 2.8 trillion, announced in November 2018 that, in cooperation with Ripple, it would provide an international money transfer service on the payment corridor from Japan to Brazil
READ: Number of contract calls on Ethereum rises by 300%
Other leading global banks using Ripple include Europe’s banking giant, HSBC Holdings Plc, with assets of about $2.5 trillion, which disclosed in 2019 that it would use the XRP payment solution.
XRP’s unique advantages over Bitcoin include the following;
- 1.XRP is x1000 faster than $BTC (3-4 seconds)
- 2.XRP is x1000 cheaper than $BTC (> $0.01)
- 3.XRP is better for the environment (no mining)
- 4.XRP is more scalable
Cryptocurrency
Crypto: Large investors transfer over 700,000 Ethers
Large investors moved over 700,00 Ether coins in five different transactions from unknown wallets.
Ethereum whales are going for a rebound as price pick up from its recent lows.
Statistics seen from Whale Alert, an advanced crypto tracker showed large investors moved over 700,00 Ether coins in five different transactions from unknown wallets to unknown wallets.
READ: Over 1,000,000 stolen XRP transferred from Kucoin to major crypto exchanges
Highlights of some transactions seen by Nairametrics include;
🚨 🚨 🚨 🚨 🚨 148,275 #ETH (52,646,171 USD) transferred from unknown wallet to unknown wallet
— Whale Alert (@whale_alert) September 30, 2020
🚨 🚨 🚨 🚨 135,855 #ETH (48,319,376 USD) transferred from unknown wallet to unknown wallet
— Whale Alert (@whale_alert) September 30, 2020
🚨 🚨 🚨 🚨 136,912 #ETH (48,695,421 USD) transferred from unknown wallet to unknown wallet
— Whale Alert (@whale_alert) September 30, 2020
READ: Investor moves $133 million worth of Bitcoins, suspected from Coinbase
What you should know; Nairametrics had in recent times, observed the high movement by these Ethereum whales as these large entities have purchased almost half of all the Ethereum mined so far in 2020
At the time this report was drafted Ethereum traded at $357.11 with a daily trading volume of about $10 Billion. ETH price is up 0.1% in the last 24 hours. It has a circulating supply of 110 Million coins and a max supply of ∞ coins.
READ: Warning signs: Ethereum daily active wallets hit a 67-day low
Whales are basically large entities that own a significant amount of Ethers This means that an Ethereum whale would be a single Ethereum address owning around 1,000 Ethereum or more.
Ethereum is a cryptocurrency designed for decentralized applications and deployment of smart contracts, which are created and operated without any fraud, interruption, control or interference from a third party.
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Quick fact; Ethereum 2.0 is an upgrade that aims to solve the blockchain trilemma – security, scalability, and decentralization.
- In alternative smart contract platforms, they are designed to be highly scalable but compromises on decentralization.
- Whereas a highly secured and decentralized blockchain network would have the trade-off being highly unscalable.
- Ethereum 2.0 brings a very different flavor of design that aims to address those issues by way of using Proof-of-Stake (POS), Beacon Chain, Sharding, and Execution Environment. Due to the complexity of the project, the development will take place in 3 phases
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Prince Joshua Mamud
September 16, 2020 at 12:31 pm
Great information to go with, , thanks a lot.