Nigeria’s Securities and Exchange Commission (SEC) has granted approval for the NASD Over-the-Counter (OTC) Securities Exchange to introduce blockchain-based stock token trading, according to a statement released by the exchange on Monday.
The approval allows NASD to issue digital tokens representing shares in unlisted public companies, offering a technology-driven alternative to traditional stock certificates. The move positions Nigeria among the first African countries to formally integrate blockchain technology into regulated securities trading.
How the System Works
Under the approved framework, stock tokens will serve as digital representations of equity in companies listed on the NASD platform. Each token corresponds to a share in an unlisted public company, stored and transferred using blockchain technology rather than paper certificates or traditional electronic settlement systems.
NASD Chief Executive Bola Ajomale said the approval represents a significant evolution in how securities are issued and traded in Nigeria. “This development will enhance transparency, reduce settlement times, and lower the barriers to entry for retail investors seeking exposure to unlisted companies,” Ajomale said.
The SEC’s approval letter, dated 17 April 2025, requires NASD to implement strict investor protection measures, including robust custody arrangements, cybersecurity protocols, and clear disclosure requirements for companies issuing tokenised shares.
Regulatory Framework and Oversight
The blockchain-based trading system will operate within Nigeria’s existing securities regulations. Companies wishing to tokenise their shares must still meet NASD’s listing requirements and comply with disclosure obligations under the Investments and Securities Act.
The SEC has mandated that NASD establish a dedicated technology oversight unit to monitor the blockchain infrastructure and ensure compliance with anti-money laundering and know-your-customer requirements. All investors will be required to complete identity verification before trading tokenised securities.
Settlement of tokenised stock trades will occur on the same day, compared to the current two-day settlement cycle for traditional equity transactions on Nigerian exchanges. NASD said this faster settlement reduces counterparty risk and improves capital efficiency for investors.
NASD currently lists over 40 unlisted public companies with a combined market capitalisation exceeding ₦500 billion ($320 million). The exchange primarily serves small and medium-sized enterprises that do not meet the listing requirements of the Nigerian Exchange Limited, the country’s main stock exchange.
Nigeria’s capital markets have seen limited retail participation, with fewer than 0.3% of the population holding brokerage accounts. NASD believes tokenisation could lower transaction costs and simplify the investment process, potentially attracting younger, digitally native investors.
The approval comes as Nigeria continues to develop its regulatory approach to digital assets. In December 2024, the SEC issued guidelines for the registration of digital asset exchanges, though cryptocurrency trading remains restricted for institutional investors following a central bank directive.
NASD has not announced a specific launch date for the blockchain trading platform but indicated that technical implementation would begin in the second quarter of 2025.