Nigerian SEC Speeds Up Crypto Provider Registration

The Nigerian Securities and Exchange Commission (SEC) has introduced a new initiative to speed up the registration process for Virtual Asset Service Providers (VASP). This move aims to update the regulatory framework to better fit the current complexities of the crypto market.

In March, the SEC made significant changes to its Rules on Digital Assets. One major change was raising the VASP registration fees from 30 million naira ($20,161) to 150 million naira ($100,806). While this increase raised concerns about reduced business participation, it also aimed to enhance financial stability among VASPs.

On June 21, the SEC introduced the Accelerated Regulatory Incubation Program (ARIP). This 30-day program provides a unique opportunity for VASPs in Nigeria to quickly meet all regulatory requirements, ensuring full compliance. VASPs must register through the SEC ePortal within this period or face immediate prosecution.

This initiative coincides with the appointment of Emomotimi Agama as the new director-general of the SEC in April. Agama, known for his crypto-friendly approach, has clashed with stakeholders in Nigeria’s growing crypto industry. In May, he launched a campaign against the use of the Nigerian Naira on crypto exchanges, blaming it for the currency’s devaluation. This led to the Naira being delisted from several major exchanges, including KuCoin and Binance.

In December 2023, the Central Bank of Nigeria lifted its two-year ban on banks operating accounts for VASPs, moving towards a regulatory approach instead of an outright ban. However, microfinance banks are still restricted from facilitating crypto transactions. The increased registration fees and the ARIP program indicate a strict regulatory stance on cryptocurrency trading and use.

Nigeria is a rapidly growing crypto hub, with about 22 million people (10.3% of the population) actively owning crypto. The SEC’s new measures aim to create a more stable and secure environment for crypto activities. The ARIP reflects the SEC’s commitment to improving regulatory oversight and ensuring all VASPs operate within a clear framework.

These regulatory changes are part of Nigeria’s effort to balance innovation with security in the crypto space. By tightening regulations and increasing fees, the SEC hopes to eliminate unqualified players and strengthen market integrity. This approach is crucial for building consumer confidence and fostering industry growth.

Emomotimi Agama’s leadership at the SEC marks a new phase for crypto regulation in Nigeria. His efforts to regulate the market, despite opposition, highlight the need for a robust regulatory framework. The success of these initiatives may serve as a model for other countries in the region.

In summary, the Nigerian SEC’s new Accelerated Regulatory Incubation Program and other measures represent a major step toward a well-regulated crypto environment. While challenging for VASPs, these changes offer opportunities for compliant players to thrive in a stable and transparent market. As Nigeria continues to grow as a crypto hub, these regulations will be key to sustainable development and investor protection.