Nigerian SEC Issues First Crypto Exchange Licenses, Signaling Regulatory Shift
In a landmark move that signals a significant shift in Nigeria’s approach to cryptocurrency regulation, the Nigerian Securities and Exchange Commission (SEC) has granted its first provisional operating licenses to local crypto exchanges. This development marks a crucial step towards formal recognition and regulatory oversight of the country’s burgeoning digital asset industry.
According to a press release from the SEC, two cryptocurrency exchanges, Busha Digital Limited and Quidax Technologies Limited, have received “approval-in-principle” to operate under the Accelerated Regulatory Incubation Program (ARIP). This program was introduced to strategically onboard firms that had commenced operations prior to the release of the Rules on Virtual Asset Service Providers in May 2022.
Buchi Okoro, co-founder and CEO of Quidax, hailed the decision as a “big win for Nigeria’s embrace of crypto.” He commended the SEC, particularly under the leadership of Dr. Emomotimi Agama, for “taking the bold step to bring order, confidence, and investor protection to our industry.”
The provisional licenses will allow these exchanges to operate as registered crypto platforms in Nigeria, paving the way for collaboration with banks and other financial institutions, subject to approval from the Central Bank of Nigeria. This move is expected to foster trust in cryptocurrency and enhance protection for crypto enthusiasts in the country.
In addition to the two exchanges, the SEC has admitted five other firms to test their models and technology under its Regulatory Incubation (RI) Program. These include blockchain platform Trovotech, Nigerian stablecoin provider Wrapped CBDC, real-estate token platform HousingExchange.NG, digital real-estate investment platform Dream City Capital, and custody platform Blockvault Custodian.
The SEC emphasized that the ARIP and RI programs are “the only avenues for well-intentioned entities to legitimately introduce their digital products and services to the Nigerian Capital market.” The regulator strongly advised the public to refrain from dealing with unauthorized operators who have not received SEC approval.
This regulatory shift comes against the backdrop of Nigeria’s high cryptocurrency adoption rate. The country has consistently ranked among the top nations globally in terms of crypto awareness and usage. According to Chainalysis’ 2023 report, Nigeria ranked second in crypto adoption among 154 countries, underscoring its critical role in the global digital asset ecosystem.
However, the path to regulation has not been without challenges. The SEC’s licensing requirements are stringent, mandating a minimum upfront capital requirement of 500 million naira (approximately $556,620) and a current Fidelity Insurance Bond covering at least 25% of the stipulated minimum paid-up capital for both digital asset exchanges and offering platforms.
As the regulatory landscape evolves, industry observers expect other local exchanges to follow suit and seek to meet the SEC’s requirements. This development is seen as a potential catalyst for increased foreign investment in Nigeria’s crypto sector, providing a more stable and secure environment for both local and international investors.
