Nigeria’s Securities and Exchange Commission (SEC) has issued a 30-day ultimatum for cryptocurrency exchanges and digital asset traders to re-register their businesses, warning of enforcement actions against those who fail to comply. This directive is part of the country’s broader effort to regulate digital asset trading.
The SEC announced the re-registration requirement as a means to amend its rules regarding digital asset issuance, offering platforms, exchanges, and custody for virtual asset service providers (VASPs). In a statement on its website, the commission said, “All operating and prospective VASPs are hereby directed to visit the SEC ePortal to complete the application process no later than 30 days from the date of this circular.”
Nigeria has experienced significant growth in cryptocurrency adoption, ranking second on the 2023 Global Crypto Adoption Index by Chainalysis, up from 11th place in 2022. This increase in adoption occurred despite a two-year ban by the Central Bank of Nigeria (CBN) that prohibited banks from facilitating crypto transactions.
The SEC’s move comes amid rising skepticism and scrutiny of digital assets. In June 2023, the SEC issued a warning against a fraudulent entity using the name of crypto exchange Binance, highlighting the high risks associated with digital assets and the potential for total investment loss. Earlier in the year, Nigerian authorities accused exchanges like Binance of facilitating money laundering and influencing the foreign exchange market, further fueling the regulator’s cautious stance on digital currencies.
Additionally, the SEC recently cautioned against investing in DAVIDO, a meme coin promoted by Nigerian Afrobeats star Davido. Despite these warnings, Nigeria’s crypto market continues to thrive, with many citizens turning to digital currencies as an alternative to the devaluing naira amid economic challenges.
The SEC is also exploring the potential of tokenization, with plans to develop a pilot program for a permissioned liquidity pool consisting of tokenized bonds and deposits. This initiative aligns with the regulator’s broader efforts to adapt to the evolving digital asset landscape and ensure the integrity and stability of the financial system.
The push for stricter regulations reflects Nigeria’s ongoing commitment to navigating the complexities of the rapidly growing digital asset market while addressing economic issues and protecting investors.
