Regulatory Approval

Nigeria's Securities and Exchange Commission (SEC) has officially approved the use of blockchain-based versions of traditional shares. Early next month, the NASD OTC Securities Exchange, the nation's over-the-counter bourse and alternative investment platform, will open access to tokenized assets. The foundation for this decision was laid in 2023 when the SEC authorized NASD to develop asset-backed digital tokens.

Technological Infrastructure

To implement the project, NASD collaborated with Blockstation Inc., a Canadian company. The technology provider supplies the blockchain infrastructure that enables stock exchanges to list and trade tokenized securities in near real-time.

Market Problem Addressed

The primary target audience for the new infrastructure is Nigeria's small and medium-sized enterprises (SMEs), which struggle to access bank credit and traditional capital markets. According to NASD acting Managing Director Chinwendu Ekeh, digital securities offer companies "a faster, lower-cost, credible path" to meet their financial needs.

Scaling Potential and Context

The integration of blockchain technology presents opportunities for issuing tokenized versions of: - Bonds - Private-market instruments - Real estate - Structured investments Nigeria is leveraging technological innovations and its demographic advantage (over 60% of the country's population is under 30) to deepen its capital markets. The country is following a broader trend across the African continent, joining South Africa, Kenya, and Ghana in expanding the use of blockchain and digital assets. NASD acting Managing Director Chinwendu Ekeh commented on the launch: "We see this less as a destination and more as the beginning of a new era in capital formation."