(Bloomberg) -- Nigeria’s Securities and Exchange Commission is processing applications for digital exchanges on a trial basis in a bid to widen market participation in Africa’s most populous country where the central bank restricts trading in cryptocurrencies.

The SEC is considering permitting tokenized coin offerings on licensed digital exchanges that are backed by assets including equity, debt, property but “not crypto,” Abdulkadir Abbas, head of securities and investment services at the Abuja-based commission said in an interview in Lagos. “We always like to start, as a regulator, with a very simple clear proposal before we go into the complex ones.”

The move may lure digitally-savvy people in a nation of more than 200 million — with 43% of the population below 14 — to local assets including equities, which has been shunned for years. The West African country accounts for the largest volume of cryptocurrency transactions done on peer-to-peer trading platforms outside the US, according to Paxful, an exchange that folded up in April. 

Other nations are also testing similar tokens. Singapore last year began a project to investigate potential uses of asset tokenization called “Project Guardian.” The pilot, led by DBS Bank Ltd., JPMorgan Chase & Co. and Marketnode Pte, involves the creation of a permissioned liquidity pool comprising tokenized bonds and deposits.

Nigeria’s SEC aims to register fintech firms as digital sub-brokers, crowd-funding intermediaries, robo-advisors, fund managers and tokenized coins issuers, it won’t register crypto exchanges until there’s agreement on standards with the central bank, which in 2021 ordered commercial lenders not to facilitate the transactions.

Intending digital exchanges will undergo a year of “regulatory incubation” during which they will only offer skeletal services monitored by the SEC to study the pattern of their operations and fitness to render the services in the country, Abbas said. “By the 10th month, we should be able to make a determination whether to register the firm, extend the incubation period or even ask the firm to stop operation.” 

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