What are Digital Assets?
Digital assets are simply items whose content is stored in electronic format.
With that definition, you would most likely be thinking about images, music, movies, documents, etc. The truth is, those indeed are digital assets. Thanks to technology, these assets have developed far beyond that, and are also digital currencies.
What Are The Types of Digital Assets?
Based on this article, I would be focusing on two major types of digital assets which serve as a source of money. Gift cards and cryptocurrencies.
Gift cards or gift certificates are a type of debit card, pre-loaded with a specific amount of money that could be used for a variety of purchases at a designated brand.
Gift cards serve as alternative sources of payment at designated brands. For example; A $100 Amazon gift card could be redeemed to make purchases online or any of the multiple Amazon stores located in the United States.
These cards are also excellent presents to give a loved one on their special day. When a birthday, wedding anniversary, baby shower, graduation, etc is coming up, gifting your loved one a loaded gift card from their favourite brand would always put you in their good books.
Presently, the numerous gift card brands could not all be possibly be listed. However, some of the notable and familiar names include; Amazon, Itunes, Steam, Walmart, Apple, Google Play Gift Cards, etc.
What are cryptocurrencies?
Cryptocurrencies are Binary data that were designed to serve as a means of exchange of goods and services. Created with the use of blockchain technology, these coins are secured by Cryptography.
Currently, there are over 10,000 coins in the crypto market. You should be familiar with certain names like Ethereum, Bitcoin, Tether, etc.
Evolution of Digital Asset trading in Nigeria
To those who are just getting accustomed to digital asset trading in Nigeria, you should consider yourselves lucky. There is a very huge difference between what it is now and what it was back then.
A couple of years back, most Nigerians were not familiar with this concept. A crypto or gift card holder in Nigeria, wanting to exchange his asset for cash was practically embarking on an impossible mission here.
It was just not feasible. This was not a result of the difficulty of this process per se, but the awareness, There were a lot of dark clouds regarding these assets here in Nigeria, and as a result, people felt very hesitant to own or collect them. With very little demand for this service, there was no incentive for individuals to provide supply.
How did we get here? you may be wondering. Thanks to certain trading platforms that decided to pioneer the movement, the market was able to grow over the years.
The founders of these early platforms also witnessed the vast scarcity in the market and knew that they most likely won’t be the only ones going through this. They leapt and decided to create a solution to this problem without ripping people off.
Word got around, and many other Nigerians developed the confidence to trust these platforms with their assets. As the demand for this service started growing rapidly, other entrepreneurs saw the opportunity and decided to enter the market.
In Nigeria, what was once perceived as a myth, is not only possible but has been made very simple.
The Impact of The Digital Asset Trading Market on Nigeria’s Economy
Another important aspect to look at after the evolution of this market is its impact. Has this market affected Nigeria’s economy Positively or negatively?
I believe that everything in life has its pros and cons. It would be up to you to decide if the pros outweigh the cons for you or vice versa.
Since the introduction of digital asset trading on a national level, Nigerian citizens have enjoyed the ease of transactions. Day-to-day activities such as payments and exchange have been made simpler and faster amongst Nigerians and even beyond.
The increase in patronage of this service has profited such platforms, which has led to its continuity and expansion. This act has employed various intelligent Nigerians.
This market has also aided international business transactions between Nigerians and individuals and companies in the diaspora.
For example, a graphics designer or web developer working remotely in Nigeria could be freelancing for a company located in America and receive payment straight to his BTC wallet or the equivalent in gift cards, which saves the several hassles faced in the banking halls or waiting for hours or days for the money to arrive from outside the country.
With the massive rise in demand for this service, unfortunately, there was also an increase in digital asset scams in the market. Crypto and gift card owners have fallen victim to these scammers throughout exchanging their assets for cash.
Quite frankly, this would only happen when adequate research is not conducted. With money, you should be patient. There should be enough background checks done with whoever you are entrusting your money with. Till today there are still various victims of BVN and real estate scams. This would not stop us from using our traditional banks or buying and renting properties.
There are still legitimate exchange platforms to sell gift cards in Nigeria which could be used to avoid scams.
FAAC Disburses N699.8bn to FG, States, Councils
By Modupe Gbadeyanka
The sum of N699.824 billion was on Friday distributed to the federal, state and local governments by the Federation Accounts Allocation Committee (FAAC).
The funds were from the revenue generated in December 2021 by the federation and shared among the three tiers of government in line with the agreed sharing formula.
Members of the FAAC, which also comprises Commissioners of Finance of the 36 states of the federation, had a virtual meeting to discuss the amount to be shared in January 2022 and at the end of deliberations, it was agreed that N699.8 billion should be disbursed, higher than the N675.946 billion shared in December 2021 by N23.878 billion.
This comprises distributable statutory revenue of N507.267 billion, distributable Value Added Tax (VAT) revenue of N187.409 billion and Exchange Gain of N5.148 billion.
About N30.003 billion was deducted as the cost of collection of the earnings by the various revenue-generating agencies, while N36.643 billion was for the total deductions for statutory transfers, refunds and savings.
A breakdown of the distributed revenue for this month showed that from the N699.8 billion, the federal government was allocated N279.457 billion, states were allotted N221.190 billion, while the local councils were given N163.879 billion, with N35.297 billion shared to the relevant states as 13 per cent derivation revenue.
A further breakdown showed that in the month, the federal government got N248.885 billion from the statutory revenue of N507.267 billion, while states received N126.238 billion, with the local government councils getting N97.324 billion and the relevant states receiving N34.820 billion as 13 per cent derivation revenue.
Last month, the country generated N201.255 billion from value-added tax, N5.080 billion higher than the N196.175 billion raked in November 2021 and from this, N8.050 billion was removed as the cost of collection, while N5.796 billion was allocated to the North East Development Commission (NEDC) and N187.409 billion was shared by the tiers of government.
From this, the federal government took N28.111 billion, states got N93.705 billion, while the local government councils received N65.593 billion.
The total exchange gain for last month was N5.148 billion and the federal government was given N2.461 billion, N1.248 billion and N0.962 billion were shared to the states and local councils respectively, while N0.477 billion was given to the relevant states as 13 per cent derivation revenue.
In a communiqué issued on Friday after the FAAC meeting for this month, it was disclosed that the balance in the Excess Crude Account (ECA) as of January 21, 2022, was $35.368 million.
NGX Trading Indices Sustain Growth as NNFM Further Gains 9.72%
By Dipo Olowookere
The trading indices of the Nigerian Exchange (NGX) Limited further appreciated on Friday by 0.15 per cent on sustained bargain-hunting.
At the close of business, the All-Share Index (ASI) rose by 66.83 points to 45,957.35 points from 45,890.52 points, while the market capitalisation expanded by N36 billion to N24.761 trillion from N24.725 trillion.
During the session, the banking space lost 0.11 per cent, while the industrial goods sector closed flat, with the energy, insurance and consumer goods counters growing by 2.55 per cent, 0.43 per cent and 0.33 per cent respectively.
Unlike the preceding session, trading activities were low yesterday with the trading volume, value and number of deals waning by 67.76 per cent, 92.25 per cent and 13.89 per cent respectively.
A total of 281.6 million shares worth N2.4 billion exchanged hands in 3,739 deals on Friday compared with the 873.5 million shares worth N31.5 billion transacted in 4,342 deals on Thursday.
Transcorp finished the day as the most traded stock with 35.7 million units sold for N38.1 million, followed by Courtville with 31.8 million units sold for N14.4 million.
Sovereign Trust Insurance transacted 26.4 million equities valued at N6.1 million, Access Bank exchanged 22.2 million stocks for N216.9 million, while FBN Holdings traded 18.4 million shares worth N220.2 million.
Business Post reports that investor sentiment remained relatively strong yesterday as the market breadth closed positive with 21 price gainers and 14 price losers.
For the second straight session, Northern Nigerian Flour Mills (NNFM) closed as the best-performing stock with a price appreciation of 9.72 per cent to trade at N7.90.
Courtville gained 9.52 per cent to sell for 46 kobo, Vitafoam improved by 5.46 per cent to N22.20, FTN Cocoa rose by 5.41 per cent to 39 kobo, while Seplat grew by 4.86 per cent to N755.10.
The worst-performing stock was Regency Assurance because of the 4.55 per cent loss it posted at the exchange on Friday, closing at 42 kobo.
Sovereign Trust Insurance lost 4.00 per cent to trade at 24 kobo, Sunu Assurances depreciated by 3.13 per cent to 31 kobo, Honeywell Flour fell by 3.03 per cent to N3.20, while Custodian Investment dropped 2.76 per cent to N7.05.
Tough Times Await Promoters of Unregistered Investment Schemes
By Dipo Olowookere
Promoters of Ponzi schemes and unregistered investment schemes in Nigeria may soon be in big trouble if the law being proposed by the National Assembly is passed into law and signed by the President.
On Thursday, a bill to amend the Investment and Securities Act 2007, sponsored by Mr Babangida Ibrahim, representing MalumFashi/Kafur Federal Constituency in Katsina State at the House of Representatives, scaled the second reading.
The amendment is titled A Bill for an Act to Repeal the Investments and Securities Act, 2007 and Enact the Investments and Securities Bill to Establish Securities and Exchange Commission as the Apex Regulatory Authority for the Nigerian Capital Market as well as Regulation of the Market to ensure Capital Formation, the Protection of the Market to ensure Capital Formation, the Protection of Investors, Maintain Fair, Efficient and Transparent Market and Reduction of Systematic Risk; and for Related Matters.
The bill intends to combat the menace of Ponzi schemes and ensure that the Securities and Exchange Commission (SEC) is well equipped to stem the tide.
According to Mr Ibrahim, there has been a lot of complaints by Nigerians on the activities of these schemes that promise unreasonably high returns and at the end of the day, they fleece Nigerians of their hard-earned money hence the need for more regulations to monitor them.
Under the proposed law, ‘A bill to repeal the Investment and Securities Act 2007 and to enact the Investments and Securities Act, 2021’ which passed the second reading at the floor of the House of Representatives yesterday, SEC will be empowered to address the challenges of Ponzi schemes.
Section 195 (1) of the Bill empowers SEC thus: “The Commission shall have the power to enter and seal up all prohibited schemes and shall obtain an Order of court to freeze and forfeit all assets of such schemes to the Federal Government of Nigeria.
“(2) The cost and expenses incurred under subsection (1) above shall be a first charge from the funds and properties of the illegal scheme including assets of its owners, promoters and or managers, whether acquired legitimately or otherwise.
“(3) For the purposes of this Bill, “prohibited scheme” including those commonly known as a Ponzi or Pyramid scheme means: (a) Any investment scheme that pays existing contributors with funds collected from new contributors to the scheme promising high returns with little or no risk: i) Whether or not the scheme limits the number of persons who may participate therein, either expressly or by the application of conditions affecting the eligibility of a person to enter into, or receive compensation under the scheme; or ii) Whether the scheme is operated at a physical address or through the internet or other electronic means. (b) Any scheme where participants attempt to make money by recruiting new participants usually where: (i) the promoter promises a high return in a short period of time, and (ii) no genuine product or service is actually sold; or (iii) the primary emphasis is on recruiting new participants
“(4) The promoter(s) and operator(s) of any entity engaged in a prohibited scheme commits an offence and is liable upon conviction to imprisonment for a term of ten (10) years or a fine of N5,000,000 or both”.
According to Mr Ibrahim, “The current ISA 2007 is old and we all know a lot has happened between that time and now like technological advancements. The capital market has to be dynamic in today’s world in a bid to contribute its quota to national development and that is one of the reasons why we are pushing this.”
“A lot of things have happened between that time and now hence the need for an amendment. When that law came into existence we did not have derivatives and commodities markets as we do now, these are some of the issues that are necessitating this amendment.
“The plan is to make this Bill a little bit flexible so some national government can be able to approach the capital market to source for fund either for developmental projects,” he added.
Another part of the amendment is to increase the period within which a claim for compensation could be made for the Investor Protection Fund to six years from the date of occurrence of the defalcation, revocation, cancellation, insolvency or bankruptcy of the dealing firm. The period in the current Act is six months.
The objectives of an Investor Protection Fund is to compensate investors who suffer pecuniary loss arising from the insolvency, bankruptcy or negligence of a dealing member firm of a securities exchange; defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received or deemed received by the dealing member firm in the course of its business as a capital market operator; and revocation or cancellation of the registration of a dealing member firm.
According to the proposed amendment, two new subsections have been introduced to complement the existing provisions on the manner in which a claim to the investor protection fund can be made.
This is a departure from Section 213 (2) of the 2007 Act, which requires a claim for compensation to be made in the first instance to the securities exchange.
In addition, subsection (4) of the Act has been modified to take care of such preconditions for compensation as may have been prescribed by the Board of Trustees.
Specifically, it added that a verified claim must be paid by the investor protection fund to an investor within 14 days of such verification by the securities exchange.
It said, “A claim for compensation under this part of the Bill shall be made in writing to the board of trustees within 6 years from the date of occurrence of the defalcation, revocation or cancellation of the registration of the dealing member firm and insolvency or bankruptcy of the dealing member firm, and any claim which is not so made shall be barred unless the Commission otherwise determines.
“No action for damages shall lie against a securities exchange or against any member or employee of a securities exchange or of a board of trustees or management sub-committee by reason of any notice published in good faith and without malice for the purposes of this section.”
Mr Ibrahim expressed the optimism that when the Bill is passed into law, it would empower the SEC with the necessary backing to effectively regulate the capital market and emphasize the independence of the agency in line with the requirements of the International Organization of Securities Commissions (IOSCO).
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