SEC: How To Register Cryptocurrency Company In Nigeria Using These 11 Steps Guide

Last Updated on April 24, 2021 by Ope Quadri

One of the best pieces of news to the cryptocurrency community in Nigeria lately is the announcement by the Security and Exchange Commission (SEC) that crypto-based companies will now have to be certified by the regulatory body.

For us, the decision of SEC will definitely increase the adoption of bitcoin, ethereum, litecoin, bitcoin cash and other coins in Nigeria.

In this guide, we’ll share some useful tips with how to register a crypto-based company in Nigeria amidst the new official regulations by the SEC regarding the operation of ICOs, crypto firm in Nigeria on September 14, 2020, to regulate the activities of owners of platforms that deal in digital assets.

So…

Where do I begin to register my cryptocurrency trading firm in Nigeria?

We know it could be daunting setting up a cryptocurrency-based firm in Nigeria amidst the new law since it’s the first time the Nigerian authority would be coming in after several years of warning that Nigerians should not trade in digital assets describing it as extremely risky and filled with fraud.

At this time, the crypto-based registration process is still new to lots of business owners and those who are interested in setting up a crypto trading platforms in Nigeria.

But don’t you worry, we’ve got you covered in this step-by-step guide on how to get register your business name at the CAC and satisfy the requirements of SEC (a most for digital asset business set).

Are you worried about the potential legal hurdle?

You don’t need to because this guide would help you jump through hurdle in order to be properly set up your crypto-based company.

But before we jump right in, let’s take a look at the categories of SEC digital assets regulations

Categories of cryptocurrencies in Nigeria:

  1. Crypto Asset- e.g non fiat virtual currency
  2. Utility Tokens or “Non-Security Tokens” (e.g., virtual tokens.)
  3. Security Tokens” (e.g., virtual tokens)
  4. Derivatives and Collective Investment Funds of Crypto Assets, Security Tokens and Utility Tokens

Crypto Asset

Treated as commodities if traded on a Recognized Investment Exchange and/or issued as an investment, and is subject to Part E of SEC Rules and Regulations and any other relevant sections and subsequent Rules which will be enacted in future

Utility Tokens or “Non-Security Tokens”

Treated as commodities. However, spot trading and transactions in Utility Tokens do not fall under SEC purview unless conducted on a Recognized Investment Exchange and therefore subject to Part E of SEC Rules and Regulations and any other relevant sections and subsequent Rules which will be enacted in future

Security Tokens”

Deemed to be Securities pursuant to PART XVIII (315) of ISA, “definition of Securities’’. All financial services
activities in relation to Security Tokens, such as operating primary /secondary markets, dealing / trading / managing investments in or advising on Security Tokens, will be subject to the relevant regulatory requirements.

Market intermediaries and market operators dealing or managing investments in Security Tokens need to be registered / approved by SEC as   CMOs, Recognized Investment Exchanges or Recognized Clearing Houses, as applicable.

Derivatives and Collective Investment Funds of Crypto Assets

Regulated as Specified Investments under the ISA & SEC Rules and Regulations. Market intermediaries and market operators dealing in such Derivatives and Collective Investment Funds will need to be registered / approved by SEC.

From the above classifications, you can no longer operate in Nigeria without being certified by regulatory bodies.

Step-By-Step Process and Requirements On How To Register Cryptocurrency-Based Company With SEC In Nigeria

Coming to the crux of the matter, you’d have to pass through four major hurdles to register a cryptocurrency firm or digital asset company in Nigeria.

  1. Register your business with CAC
  2. Fill capital market fintech assessment form 
  3. Registration proper with SEC
  4. Pay the required fees at SEC to get a certificate of operation
  5. Complete the necessary forms
  6. Show evidence of Paid-Up Capital and Fidelity Insurance Bond
  7. Show Copies of credentials of sponsored individuals
  8. Submit profile of company
  9. Detailed information about the trading system
  10. Submit business plan
  11. Submit corporate documents

Register your business with CAC

To operate a legal business in Nigeria, it’s mandated to register with the Corporate Affairs Commission (CAC.

The CAC was established by the Companies and Allied Matters Act, which was promulgated in the year 1990 to regulate the formation and management of companies in Nigeria.

It is saddled with the responsibility of registering companies in Nigeria, which is a must for company formation in Nigeria, we’ve covered this process in one of our guides.

Fill Capital Market FinTech Assessment Form

Now that you have the required legal documents from the Corporate Affairs Commission, it’s time to fill the SEC’s capital market FinTech form because you will need some of the information in the assessment form.

Required Information in the Capital Market FinTech Assessment Form

  • Email address
  • Phone Number
  • Full Name(s)
  • Name of Business/innovator
  • Address of Business/innovator
  • Website URL(s)
  • Sector

From the list of sectors, you can choose any of the following:

  1. Crowdfunding
  2. Digital Assets/Crypto Token Exchanges
  3. Digital Investment Advisory/Wealth Management
  4. Fund/Portfolio Management
  5. Digital Marketplace
  6. P2P lending
  7. Other:
  • Attach CAC Certificate
  • Memorandum and Articles of Association (MEMART)
  • And other info

Registration proper with SEC

According to SEC, “The registration process for virtual assets will therefore involve a two-prong 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 or where the burden of proof is not satisfied.”

Pay the required fees at SEC to get a certificate of operation

  • Evidence of Payment of Filing/Application Fee: N50,000
  • Evidence of Payment of Processing Fee: N200,000
  • Evidence of Payment of Registration Fee: N1,000,000
  • Evidence of Payment of Sponsored Individual Fee: N50,000

Complete the necessary Forms

Duly Executed Form SEC 5 – For the Crypto-based Company

Form SEC 2 and 2D: Sponsored Individuals/Compliance Officer who shall be principal officers of the Exchange (i.e Managing Director and Principal Officers). (To be completed in duplicates)

Note:

Every applicant Manager is to have at least four sponsored individuals, one of whom should be a Compliance Officer who shall be responsible for monitoring compliance with the ISA 2007, Rules and Regulations, notifications, guidelines, instructions etc. Form SEC 2 and 2D: Directors of the Company (To be completed in duplicates)

Show Evidence of Paid-Up Capital and Fidelity Insurance Bond

Evidence of Required Minimum Paid up Capital – N500,000,000 (Five Hundred Million Naira) (i.e. Bank balances, fixed asset or Investment in quoted Securities);

Current Fidelity Insurance Bond covering at least 25% of the minimum paid-up capital as stipulated by the Commission’s Rules and Regulations;

Show Copies of credentials of sponsored individuals

1) Minimum of four sponsored Individuals, one of whom shall be a compliance officer;

2) Managing Director of the Company to be among the sponsored individuals;

3) Full postal addresses of immediate previous employers, bankers (with Current Account number) and nominated referees of sponsored individuals;

4) Detailed curriculum vitae of sponsored individuals and Directors which should include details of activities arranged from Secondary School to date with dates; (all gap in employment and educational history should be explained);

5) Copies of credentials of sponsored individuals including secondary school and NYSC discharge certificates; originals will be required for sighting by the SEC;

6) Evidence from the Sponsored Individuals of having the minimum of four years post-graduation experience to perform the Function as stipulated by the Commission`s Rules and Regulations:

7) Police clearance report for each Sponsored Individual. Each sponsored individual is to report at the SEC head office in Abuja or the Lagos zonal office with two recent passport photographs to commence the process;

8) Copy of means Identification of the Directors and the Sponsored Individuals of the Company (International Passport, tax or utility payment documents);

Submit profile of the company

1) The name(s) and address (es) of the company’s subsidiaries/associated companies, type of business and percentage holding

2) Copy of the Form for the General Undertaking for Members

3) 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’;

4) Profile of the Company should include among others brief history of the company, organizational and shareholding structure, principal officers as well as details of past and current activities

5) Information as to its organization including structure and profile of members of its Council/Board as well as rules and procedure

6) Detailed information about the promoters and principal officers of the Exchange

7) Evidence of Payment of shares allotted to the shareholders

8) Copy of the proceedings of the Exchange and the detailed documents in respect of the Investor Protection Fund and Trade Guarantee Fund when finalized

9) Forward Instruction and Inspection manuals of members activities

10) Copy of information relating to the Market Facilities including Trading facilities/floors, Quotation Board, Information Board/Ticker Tape, Computerization and Telephone systems

Copy of Staff Policies and Procedures

  1. Two copies of the listing requirements of the Exchange
  2. Detailed information about the trading system to be adopted
  3. Undertaking by the Exchange to forward copies of Amendments of its Rules and listing requirements for approval by the Commission
  4. Operational manual and organizational chart of the company

Business plan:

Bank statement of accounts operated by the Company for the last 6 months;

Corporate Documents:

To finalise the registration process of a crypto-based firm in Nigeria, check below for the corporate documents you’d need to submit before the SEC

1. A copy each of the following, duly certified by the CAC

2. Certificate of Incorporation

3. Memorandum and Articles of Association – this should include the power to perform the specified function;

4. CAC Form(s) showing Statement of Share Capital, Return of Allotment, and Particulars of Directors

Note: the original copy of the certificate is to be presented for sighting by an authorized officer of the SEC

5. Latest audited accounts or audited statement of affairs of the company.

6. Sworn undertaking to keep proper records and render returns as may be specified by the Commission from time to time signed by a director or the company secretary (to be notarized);

7. Sworn undertaking to abide by SEC Rules and Regulations and Investments and Securities Act No.29 of 2007 by a director or the company secretary (to be notarized)

8. Sworn undertaking by members serving on the Board of Directors of the Company and who are also Directors/having interest in Companies whose securities are being traded/could be traded on the Exchange (notarized)

9. Sworn undertaking to abide by Investments and Securities Act (ISA) No 29 of 2007 and the Commission`s Rules and Regulations(notarised)

10. Sworn undertaking to comply with and to enforce compliance by its members with the provisions of the Investment & Securities Act (ISA) 2007 and the Commission`s Rules and Regulations(notarised);

Note

The Commission may require such other documents as it considers necessary for registration.

An application for registration will only be considered as having been filed when all document (s)/information have been completed.

Every applicant Company/Firm will be inspected in the course of processing an application for registration,

A fair knowledge of the Rules and Regulations of the Commission and Investments & Securities Act No 29 of 2007 and the Capital Market is an essential prerequisite for registration.

In case you more inquiry, reach out to SEC through one of its branches across Nigeria to register your cryptocurrency trading platforms and ICOs.

SEC Offices in Nigeria

Head Office – Abuja

SEC TOWERS, Plot 272, Samuel Adesujo Ademulegun Street, Central Business District
P.M.B:315
Garki
Abuja

Lagos

3, Idejo Street, Opposite ICON House,
Off Adeola Odeku Street, Victoria Island
P.M.B:12638 Marina
Lagos State
email: lzo@sec.gov.ng
phone: 017358159
fax: 234-1-2644538

Kano

African Alliance House (4th Floor), F1, Sani Abacha Way/Airport Road, Opposite KLM Airlines
Kano
Kano State
email: kzo@sec.gov.ng

Port-Harcourt

31 Woji road, GRA phase 2
Port Harcourt
Rivers State
email: phzo@sec.gov.ng

Final thought:

With the new directive of the SEC, the government is heading towards generating more revenue from cryptocurrency wallet operators and others who provide crypto-based services in Nigeria through registration fees at the same legitimising the operation of cryptocurrency companies in Nigeria, we have lots of them springing up every day.

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