Nigeria Securities and Exchange Commission (SEC) has amended its Digital Assets rules to include provisions for promoting and marketing crypto assets and services. The rules are scheduled to become effective by June 30, 2025, giving sufficient time for crypto entities and influencers in this category to comply.
Under the new provisions, the SEC will now regulate all promotion, marketing, and advertisement of digital assets products on social media or through traditional media. In line with this, virtual assets service providers (VASPs) must get SEC approval before publishing adverts, offers, or invitations to subscribe for their crypto products.
Beyond getting this approval, the rules also emphasize the accuracy of all the information on crypto adverts and promotions, with compulsory disclosure where the individual endorsing the VASP is compensated. All adverts or marketing for digital assets are also required to avoid using misleading, future-forward, or ambiguous statements that could exaggerate asset performance or promise quick returns.
The rules state:
“Advertisements shall use simple, clear language and avoid unnecessary technical jargon or excessive details that could confuse or distract investors.”
Given that Digital Assets rules do not define what amounts to compensation, the SEC is likely to interpret this as any benefit that any individual enjoys from promoting crypto products or services. This could include whitelists, digital assets, fiat currency, NFTs, etc.
Interestingly, the rules restrict VASPs from using celebrities, influencers, fictional characters, and anyone who has not directly invested in the product or used the service in the ads. However, it allows VASPs to engage third parties to promote their products and services as long as they obtain approval from the regulator. This approval, a no-objection authorization, is compulsory regardless of whether the social media influencer is paid or unpaid.
Finfluencers to disclose promotions or face prison terms
Meanwhile, the SEC has now mandated celebrities and public figures with large social media followings who receive compensation to promote crypto products or services disclose this to their followers. Describing this group as “Finfluencers,” the rules state that failure to disclose such arrangements will now attract a penalty of at least 10 million naira or up to three years in prison or both.
According to the regulator, these guidelines have become necessary to clamp down on the proliferation of financial influencers in the country.
It said:
“This is to curb the menace and address the growing popularity of financial influencers (Finfluencers) promoting digital asset products and services or sharing of any unauthorized financial investment opportunity on social media, or through any other medium of communication.”
Additionally, Finfluencers are now required to perform due diligence and verify that the crypto product or platform they are promoting is registered and licensed with the SEC. They must also confirm that the VASP obtained approval from the SEC for the ads.
The regulator stated that it would enforce the provisions by actively monitoring all advertisements related to crypto products and services, with violations to be strictly prosecuted and sanctioned.
New digital assets rules show Nigeria’s embrace of crypto
Meanwhile, several new provisions in the Digital Assets rules show that Nigerian authorities want to embrace crypto and regulate the industry. These new provisions include the functions a VASP can apply to the Commission for registration.
Crypto entities can now apply to register as Digital Assets Offering Platforms, Exchanges, Custodians, and Intermediaries. According to the rules, all these functions will be standalone, which means no entity can apply to combine multiple functions.
The regulator also seeks to encourage more VASPs to register through its Accelerated Regulatory Incubation Program (ARIP). Under ARIP, entities providing crypto-related services can now get approval in principle that can last for 12 months, allowing them to operate while they finalize their full registration and meet the applicable requirements in the county.
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