By Oluwasegun Kosemani

…. A Summary of the Securities and Investment Act 2025 (Nigeria

First and foremost, the Nigeria Securities and Investment Act 2025 is a landmark piece of legislation that deserves commendation. It represents a forward-thinking approach to regulating the rapidly evolving world of digital assets, providing much-needed clarity and structure to Nigeria’s financial landscape. This Act is particularly advantageous for Virtual Asset Service Providers (VASPs) based in Nigeria. It offers a clear regulatory framework, which enhances legitimacy and trust in the crypto industry.

This, in turn, can attract more investment, foster innovation, and create new opportunities for economic growth. By establishing rules for VASPs, the Act ensures that businesses can operate with confidence, knowing they are compliant with the law and protected from arbitrary regulatory actions. This is a significant step toward positioning Nigeria as a leader in the African crypto space—huge Kudos to the popular SEC Boss Dr Timi Agama and his team.

Now, let’s do a quick summary of the Securities and Investment Act 2025 (Nigeria).

The Securities and Investment Act 2025, signed into law by President Tinubu on March 29, 2025, modernizes Nigeria’s capital market framework. Key provisions include:

• Enhanced Regulatory Powers: Strengthens the Securities and Exchange Commission (SEC) to oversee a broader range of financial activities.
• Digital Asset Regulation: Formally recognizes and regulates virtual assets, including cryptocurrencies, as part of the capital market.
• Investor Protection: Introduces stricter disclosure requirements and penalties to safeguard investors.
• Commodities Exchanges: Supports the development of commodities trading infrastructure, aiming to boost economic diversification.

This law updates the previous Investments and Securities Act of 2007, aligning Nigeria with global financial trends, particularly in digital assets. Huge Kudos to the entire SEC team, especially the Director General, Dr Emotimi Agama. This is truly a step in monumental history.

Hidden in plain sight 

I see everyone applauding the bill just like I have done the Bill Classify Bitcoin as a Security in Nigeria? Yes, based on available information, the ISA 2025 classifies virtual assets, including Bitcoin, as securities. The law designates virtual assets and investment contracts as securities under the SEC’s jurisdiction, requiring Virtual Asset Service Providers (VASPs) to register and comply with SEC regulations. This implies that Bitcoin is treated as a security rather than a commodity in Nigeria’s legal framework as of March 29, 2025.

Is Bitcoin a Security or a Commodity? My Position

Based on facts and global perspectives: Bitcoin is not just another digital asset; it is the foundation of the entire blockchain ecosystem. As the first and most prominent cryptocurrency, Bitcoin operates differently from other digital assets. Its decentralized nature, fixed supply, and role as a store of value make it more akin to a commodity (like gold) than a security (like stocks). Securities typically represent ownership in a company or a financial asset that generates returns based on the efforts of others. Bitcoin, however, is decentralized and does not rely on any central authority or issuer. It is a peer-to-peer digital currency designed to function as a medium of exchange and a hedge against inflation. Given its unique characteristics, Bitcoin should have its separate legal framework. Mixing it with other digital assets under a broad “securities” classification risks misapplying regulations that are not suited to its decentralized and non-securitized nature. A tailored approach would allow for more precise regulation that encourages innovation while addressing Bitcoin’s specific risks and opportunities.

How Nigeria’s Classification of Bitcoin as a Security Misaligns with Its Functional Reality

Nigeria’s decision to classify Bitcoin as a security rather than a commodity misaligns with its actual function and could complicate its economic role. Here’s why:

• Functional Misalignment: Bitcoin operates as a decentralized digital currency, not as an investment contract or a share in a company. It lacks the characteristics of a security, such as reliance on a central issuer or the promise of profits from the efforts of others. Instead, it functions more like a commodity, similar to gold, where value is derived from scarcity and utility.
• Regulatory Overreach: Treating Bitcoin as a security subject it to regulations designed for traditional financial instruments, which may not be appropriate for a decentralized asset. This could stifle its use in everyday transactions, remittances, and as a store of value, areas where Bitcoin has shown immense potential, especially in countries like Nigeria with high inflation and currency volatility.
• Unforeseen Risks: Misclassification could drive Bitcoin activity underground, making it harder to regulate and increasing the risk of fraud, money laundering, and other illicit activities. It may also deter legitimate businesses from operating in Nigeria, limiting the country’s ability to benefit from the global crypto economy.

Scenario for Everyday Nigerians: Imagine you own a piece of gold. You can hold it, trade it, or use it as a store of value. Now, if the government suddenly decides to treat gold like a stock, you’d have to comply with complex regulations meant for companies issuing shares. This would make it harder and more expensive to buy, sell, or hold gold. Similarly, classifying Bitcoin as a security could make it more difficult for Nigerians to use it as a decentralized, borderless form of money, limiting its benefits.

Global Comparison e.g. US, China, and India

• United States (2025):
  • Framework: The US has evolving regulations, with the BITCOIN Act of 2024 proposing a Strategic Bitcoin Reserve, treating Bitcoin as a commodity under the Commodity Futures Trading Commission (CFTC) for trading purposes, while the SEC regulates tokens deemed securities (e.g., via the Howey Test). The Financial Innovation and Technology for the 21st Century Act (FIT21) further clarifies this split.
  • Comparison: Nigeria’s uniform “security” classification contrasts with the US’s dual approach, potentially limiting flexibility. The US encourages Bitcoin accumulation, while Nigeria focuses on control.
• China:
  • Framework: China maintains a strict ban on crypto trading and mining (since 2021), though it permits holding Bitcoin as a virtual asset. It prioritizes its digital yuan (e-CNY), a centralized CBDC, over decentralized cryptocurrencies.
  • Comparison: Nigeria’s permissive yet regulated approach starkly differs from China’s prohibition. Nigeria’s law could foster innovation, unlike China’s suppression, but risks similar capital flight if overly restrictive.
• India (2025):
  • Framework: The Finance Bill 2025 broadens the definition of Virtual Digital Assets (VDAs) under the Income Tax Act, taxing crypto gains at 30% and imposing reporting requirements (aligned with OECD’s CARF). The Securities and Exchange Board of India (SEBI) oversees crypto as securities, while the Reserve Bank of India (RBI) favors a ban but regulates stablecoins.
  • Comparison: Nigeria and India share a securities-focused approach, but India’s tax-heavy regime contrasts with Nigeria’s emphasis on market oversight. India’s ambiguity (SEBI vs. RBI) mirrors Nigeria’s potential for regulatory overlap (SEC vs. CBN).

• Bitcoin’s Nature: Bitcoin operates as a decentralized digital currency, primarily a store of value and medium of exchange, akin to gold (a commodity). Unlike securities, it lacks an issuer promising profit based on managerial efforts, failing the Howey Test used in the US.
• Global Precedent: The US CFTC classifies Bitcoin as a commodity, supported by its market behavior (e.g., futures trading). India and Nigeria lean toward securities, but this reflects regulatory convenience rather than Bitcoin’s intrinsic properties.
• My Declaration: Bitcoin is a commodity, not a security. Nigeria’s classification as a security misaligns with its functional reality, potentially complicating its economic role.

Performance Comparison: Securities vs. Bitcoin (2010-2025)

Economic Implications

• Nigerian Stocks: Steady 7% returns suggest reliability for local investors, though moderate volatility indicates exposure to economic shifts.
• US Stocks: A 12% return reflects strong, consistent growth, making the S&P 500 a robust option despite moderate volatility.
• Gold: At 7%, gold offers stability and a hedge against inflation, with low volatility appealing to risk-averse investors.
• Bitcoin: With ~150%+ returns, Bitcoin vastly outperforms other assets, but its very high volatility underscores significant risk, appealing to speculative investors.

Overall Rating of the Law: 72/100

Strengths:

• Modernizes Nigeria’s financial system (+20).
• Enhances investor protection (+15).
• Recognizes digital assets (+15).

Weaknesses:

• Oversimplifies crypto classification (-10).
• Risks overregulation (-8).
• Lacks clarity on CBN-SEC roles (-5).

Conclusion 

The Securities and Exchange Commission (SEC) of Nigeria should reconsider its classification of Bitcoin. Based on its functional reality, Bitcoin is more accurately a commodity than a security. The US, a global leader in financial regulation, classifies Bitcoin as a commodity, allowing for a regulatory framework that acknowledges its unique properties while providing consumer protection and market integrity.

Nigeria would benefit from aligning with this global standard. Classifying Bitcoin as a commodity would:

• Foster innovation and investment in the crypto space.
• Simplify its use for everyday transactions, remittances, and as a hedge against inflation.
• Make it easier for Nigerian businesses to interact with global markets and attract foreign investment.
• Reduce the risk of driving the crypto industry underground, where it becomes harder to regulate.

By adopting a more tailored approach, Nigeria can harness the full potential of Bitcoin and the broader crypto economy, positioning itself as a leader in Africa’s digital future while protecting its citizens and economy.

Recommendation for modification

1. Hybrid Classification: Allow Bitcoin to be treated as both a commodity (for trading/exchange) and a security (for investment contracts), mirroring the US model for flexibility.
2. Incentives for Adoption: Add provisions to encourage blockchain innovation (e.g., tax breaks for startups) rather than just control.
3. CBN-SEC Coordination: Define clear boundaries between the Central Bank of Nigeria (CBN) and SEC to avoid jurisdictional conflicts, especially for payment-focused crypto uses.
4. Public Education: Include funding for Bitcoin education and crypto literacy to mitigate risks and empower citizens, given Nigeria’s high adoption rate.

This law is a step forward but needs refinement to balance regulation with innovation, ensuring Nigeria leverages its crypto potential without stifling its people’s economic freedom

Oluwasegun Kosemani wrote in from Lagos.