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SEC pegs maximum amount of digital asset offering at N10bn

By Helen Oji
16 May 2022   |   2:46 am
The Securities and Exchange Commission (SEC) has pegged the maximum fund to be raised from digital asset offering within 12 months at N10 billion.

Securities and Exchange Commission (SEC) tower. Photo/nairametrics

The Securities and Exchange Commission (SEC) has pegged the maximum fund to be raised from digital asset offering within 12 months at N10 billion.

According to the commission, a digital asset is a digital token that represents assets such as a debt or equity claim on the issuer while digital asset offering shall include initial coin offering (ICO) and other distributed ledger technology (DLT) offers of digital assets.

The restriction is contained in the commission’s new rules on issuance, offering platforms and custody of digital assets.

According to the market regulator, these rules would apply to all issuers seeking to raise capital through digital asset offerings.

SEC stated that the new rules specify that the issuer must demonstrate that the gross proceeds to be raised from the digital asset offering would be sufficient to undertake the project as proposed in the white paper.

It said: “An issuer may only raise funds subject to the following limit: Twenty times the issuer’s shareholders’ funds which is the maximum quantum of funds permitted to be raised within any continuous 12-month period, subject to a ceiling of N10 billion or any other ceiling as the Commission may determine from time to time.

“The issuer shall demonstrate that the gross proceeds to be raised from the digital asset offering would be sufficient to undertake the project as proposed in the white paper.

“In the event that the amount raised is below the soft-cap, the Issuer shall refund all monies collected from the token holders within five business days from the offer closing date.”

On the investment limit, the Commission stated that a person may invest in an initial digital asset offering subject to the various limits.

For qualified institutional and high net worth investors, it is noted that there will be no restriction on the investment amount.

For retail investors, however, the document fixed a maximum of N200,000 per issuer with a total investment limit not exceeding N2 million within 12 months.