The Nigerian Securities and Exchange Commission (SEC), under the leadership of Dr. Emomotimi Agama, has announced new regulations requiring crypto influencers to disclose paid promotions to their followers or face severe penalties.
This landmark directive aims to address the rising concerns surrounding crypto promotions in Nigeria, where influencers have been promoting dubious and often fraudulent digital assets.
The SEC’s decision to introduce these regulations was prompted by the growing influence of social media personalities who have gained popularity for promoting cryptocurrency projects. These influencers, known as “finfluencers,” have been using their platforms to market tokens, coins, and other digital assets. While some promotions have been legitimate, others have left investors at risk, with some ventures turning out to be scams.
The SEC regulation mandates that all crypto platforms or Virtual Assets Service Providers (VASPs) must secure a license from the SEC before engaging in promotional activities on social media, television, or print. This will ensure that all crypto promotions are properly vetted and that only licensed platforms are promoted to the public.
The regulation will take effect on June 30, 2025, giving crypto influencers and platforms time to comply with the new guidelines.
Severe Penalties for Non-Compliance
Under the new guidelines, any crypto influencer who fails to disclose a paid promotion could face penalties of up to N10 million or three years in prison, or both. This is a bold move by the SEC to bring accountability and transparency to the crypto space, which has been plagued by fraudulent activities.
The law specifically requires that crypto influencers disclose any paid promotions to their audience clearly. These influencers will need to make it clear whether they are being compensated for promoting a particular digital asset or platform. Failure to do so will lead to severe consequences, according to the SEC’s directive.
The SEC’s regulation also specifies that VASPs must obtain prior approval from the commission before using third parties for promotional activities. This ensures that only authorized parties are involved in crypto promotions and that any digital asset product being promoted has been vetted and approved by the SEC.
Influencers will also be required to verify that the VASPs they represent are licensed by the SEC before promoting them. This will help ensure that influencers are not inadvertently promoting unregistered or fraudulent platforms to their followers.
A Step Towards Transparency and Investor Protection
The SEC’s new regulations have been welcomed by many stakeholders in Nigeria’s cryptocurrency space. According to them, this move is a necessary step in cleaning up the industry and protecting investors.
“Crypto influencers have a lot of power over their followers, and many people in Nigeria are investing in cryptocurrencies based on the recommendations of these influencers. Unfortunately, not all of them promote legitimate platforms. This new regulation will help reduce fraud and bring order to the crypto space,” said Chijioke Okoro, a Nigerian crypto enthusiast.
The SEC has emphasized that transparency and accountability are crucial for the protection of investors in Nigeria’s rapidly growing crypto industry. By requiring influencers to disclose paid promotions, the SEC believes it can foster a safer, more reliable environment for digital asset trading.
“The new regulation will ensure that Nigerians investing in cryptocurrencies do so with full knowledge of the risks and the legitimacy of the platforms they are engaging with,” said Dr. Emomotimi Agama, Director-General of the SEC.
Crypto Industry Welcomes the New Law
Stakeholders in Nigeria’s cryptocurrency industry, including crypto platforms and investors, have expressed support for the SEC’s decision. Many see it as a necessary step in the development of a more structured and reliable digital asset market.
“We are fully in support of this new regulation,” said Okechukwu Udo, a representative of a major Nigerian crypto exchange. “There have been too many cases of fraudulent crypto platforms being promoted without any oversight. With this new law, we can start to differentiate between the legitimate players and the bad actors.”
However, not all crypto influencers are happy with the new rules. Some fear that it will limit their ability to earn money from promotions and may stifle the growth of their platforms. “This law is going to make things difficult for smaller influencers who rely on paid promotions to sustain their channels,” said a popular Nigerian crypto influencer who asked to remain anonymous. “It’s going to be harder to promote new projects if you have to go through all these procedures.”
Despite these concerns, most industry experts agree that the regulation will help bring much-needed credibility to the crypto space.
The Growing Influence of Crypto Influencers in Nigeria
Crypto influencers have become increasingly powerful in Nigeria, where interest in cryptocurrencies has surged in recent years. Many young Nigerians view digital assets as an opportunity to make money, especially in the face of economic challenges like inflation and unemployment.
Influencers have taken advantage of this interest, using their platforms on Instagram, Twitter, and YouTube to promote cryptocurrency projects. While some influencers are highly knowledgeable and promote legitimate platforms, others have been found promoting scams and dubious investment schemes.
The SEC’s new rules aim to curb these harmful practices by ensuring that all crypto promotions are transparent and that only licensed platforms are promoted.
What Happens Next?
The regulation is set to take effect in June 2025, but crypto influencers and platforms are already beginning to prepare for the changes.
With the new law in place, influencers will be required to disclose their paid promotions in clear and obvious ways, such as through hashtags or disclaimers in their posts. Crypto platforms will also need to ensure that they are licensed by the SEC before partnering with influencers for promotional activities.
The SEC has also indicated that it will step up its monitoring of crypto activities in Nigeria to ensure that all parties comply with the new regulations.
“The success of this law will depend on its enforcement,” said Dr. Agama. “We are committed to ensuring that all crypto platforms and influencers operate within the bounds of the law and that investors are protected.”
