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Nigeria, through the Securities and Exchange Commission (SEC), has officially granted operational approvals to several crypto operators, indicating an acceptance of the digital currency.
On Thursday, the SEC announced that it had granted approval-in-principle to two Digital Asset Exchanges to begin operations under its Accelerated Regulatory Incubation Program (ARIP). Five firms were also admitted to test their models and technology under its Regulatory Incubation Program.
The approved firms include Busha Digital Limited, Quidax Technologies Limited, Trovotech Ltd, Wrapped CBDC Ltd, HousingExhange.NG Ltd, Dream City Capital, and Blockvault Custodian Ltd.
The ARIP was introduced by the SEC to onboard firms that had already begun operations before the release of the Rules on Virtual Asset Service Providers in May 2022. The RI Program was designed to evaluate the business models of digital asset firms and allow them to test their products, services, and technology in a real-world market environment under the regulator’s close supervision.
This latest development follows a recent announcement by Zacch Adedeji, chairman of the Federal Inland Revenue Service (FIRS) that the government is drafting an executive bill to overhaul revenue administration, including regulating the cryptocurrency industry.
“We need a law that regulates that area of our economy. This is why we are having this engagement with the legislators. We will regulate it in a way that is not injurious to the economic development of Nigeria,” he stated.
SEC’s approvals come despite a series of crackdowns on the crypto sector earlier in 2024, following the lifting of a ban on official crypto transactions in December 2023. The government had targeted crypto operators, blaming them for the naira’s volatility, tax evasion, and terrorism financing.
The SEC emphasised that these approvals are a precursor to granting full registrations and aim to ensure appropriate protection and transparency. With these approvals, Busha Digital Limited and Quidax Technologies Limited have become the country’s first ‘licensed’ crypto operators.
“I am pleased to announce that Busha has been granted one of the first provisional licenses from the Nigerian Securities and Exchange Commission to operate as a regulated Virtual Asset Service Provider,” tweeted Michael Adeyeri, Busha’s chief executive officer.
He noted that the firm had been engaged with the process for over five years, ensuring their systems prioritised security and compliance.
Nigeria is one of the largest peer-to-peer (P2P) crypto markets globally. According to Chainalysis, a global blockchain platform, crypto transactions in the country totalled $56.7 billion between July 2022 and June 2023.
Analysts believe that regulating crypto will benefit the country. Senator Ihenyen, lead partner and head of blockchain and virtual assets practice at Infusion Lawyers, said, “Nigeria can no longer afford to keep pushing digital assets underground for obvious economic and security reasons. Our regulators will now work together to ensure consumer protection and investor safety.”
SEC highlighted that the accepted cohort comprises two Digital Asset Exchanges, four Digital asset Offering Platforms, and one Digital Asset Custodian. It also noted that additional applications to the ARIP and RI Program are being assessed and that approvals-in-principle will be granted on a case-by-case basis once the requirements are met.
“The SEC uses this medium to reiterate that only approved digital exchanges and platforms are legally authorised to carry out the business of crypto trading in any form in Nigeria. In this regard, the ARIP and RI remain the only avenues for well-intentioned entities to legitimately introduce their digital products and services to the Nigerian Capital market,” it added.
SEC has been leading efforts to establish a regulatory framework for the crypto industry, particularly after the Central Bank of Nigeria (CBN) lifted its ban in December 2023 and handed regulatory oversight to it. The commission recently revealed that it would monitor the weekly and monthly trading statistics of Virtual Assets Service Providers (VASPs) such as crypto automated teller machines (ATMs), exchanges, P2P platforms, and custodians as part of its regulatory oversight.