Nigeria is ushering in a transformative era in its digital finance landscape, as the Securities and Exchange Commission (SEC) officially grants operational approvals to several cryptocurrency operators. This landmark decision marks a significant shift in the country’s approach to digital currencies, signaling a more structured and regulated environment for crypto activities. With this move, Nigeria is poised to become a leading player in the global cryptocurrency market, setting the stage for innovation, security, and economic growth in the digital asset space.
SEC Grants Approval to Digital Asset Exchanges
On Thursday, Nigeria’s SEC announced that it had given approval-in-principle to two Digital Asset Exchanges under its Accelerated Regulatory Incubation Program (ARIP). These approvals allow the exchanges to begin operations within a regulated environment. In addition, five other firms were admitted to the Regulatory Incubation Program to test their models and technology. Among the approved firms are Busha Digital Limited, Quidax Technologies Limited, Trovotech Ltd, Wrapped CBDC Ltd, HousingExchange.NG Ltd, Dream City Capital, and Blockvault Custodian Ltd.
The ARIP was created to onboard firms that were already operational before the SEC released its Rules on Virtual Asset Service Providers in May 2022. This program aims to allow digital asset firms to test their products, services, and technology in a real-world market under close regulatory supervision.
Regulatory Oversight Amidst Growing Crypto Market
The SEC’s move to approve these crypto firms comes at a crucial time. Despite the government’s earlier crackdowns on the crypto sector in 2024, which followed the lifting of a ban on official crypto transactions in December 2023, Nigeria remains one of the largest peer-to-peer (P2P) crypto markets in the world. According to Chainalysis, a global blockchain platform, crypto transactions in Nigeria totaled $56.7 billion between July 2022 and June 2023.
With these new regulations, the SEC aims to ensure that the crypto market in Nigeria operates transparently and safely, providing protections for both consumers and investors.
Government’s Commitment to Regulating Cryptocurrency
The Nigerian government is also taking steps to regulate the cryptocurrency industry further. Zacch Adedeji, chairman of the Federal Inland Revenue Service (FIRS), recently announced that the government is drafting an executive bill to overhaul revenue administration, including the regulation of cryptocurrencies. “We need a law that regulates that area of our economy,” Adedeji stated. “We will regulate it in a way that is not injurious to the economic development of Nigeria.”
This legislative push aligns with the SEC’s recent efforts to establish a regulatory framework for the crypto industry, particularly after the Central Bank of Nigeria (CBN) lifted its ban and transferred regulatory oversight to the SEC.
The Future of Crypto in Nigeria
The SEC emphasized that only approved digital exchanges and platforms are legally authorized to conduct crypto trading in Nigeria. The commission will continue to evaluate additional applications to its ARIP and Regulatory Incubation Program, granting approvals on a case-by-case basis.
Analysts believe that these regulations will benefit the country by bringing digital assets into the mainstream economy. Senator Ihenyen, lead partner and head of blockchain and virtual assets practice at Infusion Lawyers, stated, “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.”
With these developments, Nigeria is setting the stage for a more structured and secure cryptocurrency market, paving the way for digital assets to play a significant role in the country’s economy.
Reference: Business Day
