Nigeria has officially recognized cryptocurrency operations within its borders, as the Securities and Exchange Commission (SEC) grants key operational approvals to several crypto operators.
This move marks a significant step toward the country’s acceptance of digital currencies.
On Thursday, the SEC announced that it had provided approval-in-principle to two Digital Asset Exchanges under its Accelerated Regulatory Incubation Program (ARIP), allowing them to commence operations.
Additionally, five other firms were admitted to test their business models and technology under the Regulatory Incubation Program.
The companies that received approval include Busha Digital Limited, Quidax Technologies Limited, Trovotech Ltd, Wrapped CBDC Ltd, HousingExchange.NG Ltd, Dream City Capital, and Blockvault Custodian Ltd.
The ARIP was launched by the SEC to support firms that had already begun operations before the introduction of the Rules on Virtual Asset Service Providers in May 2022. The Regulatory Incubation Program allows digital asset firms to trial their products and services in the market under strict regulatory supervision.
This development follows a recent statement from Zacch Adedeji, chairman of the Federal Inland Revenue Service (FIRS), revealing that the government is working on an executive bill to reform revenue administration, including the regulation of 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,” Adedeji stated.
The 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 previously blamed crypto operators for contributing to the naira’s volatility, tax evasion, and financing of terrorism.
The SEC emphasized that these provisional approvals are a step toward full registration and are intended to ensure consumer protection and transparency in the crypto sector.
With these approvals, Busha Digital Limited and Quidax Technologies Limited have become the first officially recognized crypto operators in Nigeria.
Busha’s CEO, Michael Adeyeri, shared his excitement on X, stating, “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.”
He noted that the firm had been diligently working towards this goal for over five years, focusing on security and compliance.
Nigeria ranks among the largest peer-to-peer (P2P) crypto markets globally. According to Chainalysis, a leading blockchain analytics firm, crypto transactions in Nigeria totaled $56.7 billion between July 2022 and June 2023.
Experts believe that regulating the crypto industry will bring significant benefits to Nigeria. Senator Ihenyen, lead partner and head of the blockchain and virtual assets practice at Infusion Lawyers, remarked, “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.”
The SEC noted that the approved cohort includes two Digital Asset Exchanges, four Digital Asset Offering Platforms, and one Digital Asset Custodian.
It also mentioned that additional applications for the ARIP and RI Program are currently under review, and approvals-in-principle will be granted as 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,” the commission stated.
The SEC has been at the forefront of establishing a regulatory framework for the crypto industry, particularly after the Central Bank of Nigeria (CBN) lifted its ban in December 2023, transferring regulatory oversight to the SEC.
The commission recently announced plans to monitor the weekly and monthly trading activities of Virtual Assets Service Providers (VASPs) such as crypto ATMs, exchanges, P2P platforms, and custodians as part of its regulatory efforts.
