Nigeria Gives Crypto Firms 30 Days to Register

Nigeria’s Securities and Exchange Commission (SEC) has announced a 30-day deadline for cryptocurrency exchanges and digital asset traders to re-register their businesses. This move is part of Nigeria’s plan to regulate digital asset trading. Failure to comply will lead to enforcement actions.

The SEC aims to update its rules on digital asset issuance, offering platforms, exchanges, and custody services. All virtual asset service providers (VASPs) must complete their application process on the SEC ePortal within the given timeframe.

Nigeria has a significant presence in the global cryptocurrency market. In 2022, Nigeria ranked 11th on Chainalysis’ Global Crypto Adoption Index and climbed to 2nd place in 2023. This rise occurred despite a ban from the Central Bank of Nigeria (CBN) preventing banks from facilitating crypto transactions.

The SEC and CBN have shown skepticism towards digital assets. In June 2023, the SEC warned against a fraudulent entity using Binance's name, stating that cryptocurrencies are “extremely risky” and could result in total investment loss. This reflects the SEC’s cautious approach towards digital assets.

Nigerian authorities have accused exchanges like Binance of money laundering and influencing foreign exchange markets. The SEC recently warned against investing in DAVIDO, a meme coin promoted by Nigerian Afrobeats star Davido, highlighting their concern for investor protection.

Despite their cautious stance, the SEC is exploring innovative financial instruments. The SEC plans to develop a pilot program for a permissioned liquidity pool, including tokenized bonds and deposits. This initiative aims to balance blockchain technology benefits with regulatory oversight.

The SEC's current regulatory push is “in line with the current realities.” This means adapting to the evolving digital asset landscape while protecting investors and the financial system. By enforcing VASP re-registration, the SEC aims to ensure only compliant and trustworthy entities operate in Nigeria’s crypto market.

In summary, Nigeria’s SEC has given crypto firms a 30-day deadline to re-register, highlighting the country’s efforts to regulate its growing digital asset market. This regulatory move aims to refine rules, ensure compliance, and protect investors. As Nigeria’s crypto adoption continues to grow, the SEC’s cautious approach underlines the need for a balanced regulatory framework supporting innovation while mitigating risks.