What the US SEC’s Innovation Exemption Means for Regulating Tokenized Assets in Africa’s Capital Markets

What African Regulators Can Adapt

Several African regulators are already moving, positioning itself as a frontier for digital finance. SEC Nigeria has admitted tokenized-securities platforms to its Regulatory Incubation programme under the Investments and Securities Act 2025, and Kenya has operationalised its Virtual Asset Service Providers Act. The U.S. order offers these efforts a useful benchmark.

• Use existing exemptive and sandbox powers to enable innovation: Where their enabling statutes allow, regulators need not wait for lengthy legislative amendments. Time-bound, conditional exemptions or well-structured sandboxes can let operators deploy tokenized securities venues under supervision, while evidence is gathered for permanent rules.
• Balance innovation with strict safeguards: The U.S SEC’s model is designed to show that flexibility can coexist with strict oversight. African regulators can mandate equivalent corporate rights for token holders, enforce public auditability of smart contracts, and limit early-stage trading volumes to mitigate systemic risk while operators pilot their infrastructure. Thresholds must be calibrated to local market depth: in less liquid markets, a tokenized venue can quickly become the main source of price formation, so surveillance and coordination with the incumbent exchange matter even more.”
• Enable capital formation: While the U.S. order is limited to listed equities, Africa’s greater need is capital formation. A clear, staged compliance pathway for tokenized local equities, bonds, and infrastructure assets, starting with professional investors before opening to retail, can attract capital that is currently locked out of illiquid markets.
• Secure the legal plumbing first: A tokenized share is only as strong as the law that recognizes it. Company, registry, central securities depository, and settlement-finality laws should expressly recognise on-chain records as evidence of legal title, so that token holders enjoy the same rights as other shareholders in law and not merely by contract, including in insolvency.
• Build a regulated cash leg and think regionally: The U.S. order allows tokenized shares to be paired only with qualifying stablecoins, tokenized money market funds, or other tokenized stocks. African regulators will need an equally robust settlement asset, whether a regulated stablecoin, tokenized deposits, or central bank money, and should coordinate across borders, through regional market-linkage and payment initiatives, so that tokenized venues deepen rather than fragment Africa’s capital markets.

Franklin Peters, Executive Chair of VASPA and CEO & Co-Founder of Boundlesspay, highlighted the strategic imperative of this regulatory approach for the continent:

“The U.S. SEC’s Innovation Exemption is a strong example of developmental regulation: it moves the regulatory posture from enforcement alone towards supervised enablement. With institutions such as the NYSE now exploring partnerships with digital asset platforms, the market signal is clear. For African jurisdictions, the lesson is that conditional, time-bound exemptions for tokenized assets can unlock new liquidity for local enterprises, foster homegrown innovation and connect Africa’s capital markets to the global digital economy.”

Speaking to the regulatory mechanics that make this exemption effective, Buki Ogunsakin, Trustee of VASPA and Principal at BBO Solicitors, noted:

“From a legal and compliance perspective, this exemption balances innovation with structural safeguards. By requiring smart contracts to be auditable, enforcing trading halts, and ensuring token holders retain equivalent corporate rights, the U.S SEC has created a permissioned environment where technology can prove its resilience. Capital market regulators across Africa can adapt this condition-based model, provided that company, registry, and settlement laws recognize the token as legal title to the underlying share, so that the ‘same rights’ condition is legally enforceable and not just contractual.”

Dr. Souhayel Tayeb, Board Advisor at VASPA, added:

“The significance of the U.S. SEC’s order lies less in what it permits than in how it permits it: time-bound, capped, conditional and transparent. That is the right template for Africa, but it must be adapted, not copied. The U.S. experiment rests on deep primary markets, a reliable reference price and settled law on who owns a share. Many African markets must first secure that foundation: legal recognition of the token as title, settlement finality and a regulated cash leg. Regulators who get this plumbing right, and calibrate safeguards to local liquidity, will give investors the protection they need and innovators the certainty they deserve.”

Global capital markets are becoming increasingly tokenized. VASPA will continue to work with regional regulators to design practical, secure, and proportionate frameworks, so that Africa helps shape the next generation of global finance rather than merely importing it.