Nigeria sets 30-day deadline for cryptocurrency businesses to re-register for compliance

Nigeria faces foreign exchange and economic challenges amid increased scrutiny and concerns over digital assets following a directive from the Nigeria Securities and Exchange Commission (SEC). Nigeria’s SEC has issued a 30-day ultimatum to cryptocurrency exchanges and digital asset traders to re-register their businesses, making it clear that it will take legal action for non-compliance.

VASP Compliance Program Launch and Registration Deadline

The Nigeria Securities and Exchange Commission (SEC) issued a statement on June 21, announcing the official launch of the Accelerated Regulatory Incubation Program (ARIP) for Virtual Asset Service Providers (VASPs). The plan aims to update existing rules for digital asset issuance, trading platforms, exchanges and custody services to adapt to the latest trends in the industry. The SEC requires all operating and potential VASPs to complete the registration application process through the SECePortal within 30 days of the announcement.

Although the Central Bank of Nigeria (CBN) has banned banks from facilitating cryptocurrency transactions for two years, Nigeria’s cryptocurrency adoption has grown significantly, ranking from No. 1 in the previous year, according to Chainalysis’ 2023 Global Cryptocurrency Adoption Index 11 moved up to second place. The SEC’s move comes amid growing public scrutiny and skepticism about digital assets.

In June 2023, the SEC issued a warning reminding investors to be wary of fraudulent entities that may misuse the names of exchanges such as Binance, and highlighted the high risks of digital asset investment, including risks that may result in a total loss of investment.

Fiat Currency Depreciation and Cryptocurrency Market Vitality

Early this year, Nigerians increasingly turned to digital currencies instead of the national currency, the naira, triggering authorities to target cryptocurrency exchanges including Binance Charges of money laundering and foreign exchange market disruption. As the Nigerian economy faces difficulties, the popularity of digital currencies has exacerbated the problem of devaluation of fiat currencies, prompting the government to implement a strict crackdown on exchanges in the peer-to-peer market.

Nigeria’s Economic and Financial Crimes Commission (EFCC) and Federal Inland Revenue Service (FIRS) had charged Binance executives with tax evasion and money laundering and detained them for a short period of time until the charges were eventually dropped.

Despite these challenges, Nigeria’s cryptocurrency market remains active. The International Monetary Fund (IMF) has recommended that Nigeria implement comprehensive regulation of the crypto industry to combat some economic problems. Meanwhile, the Nigeria Securities and Exchange Commission is exploring the tokenization space and plans to pilot a permissioned liquidity pool containing tokenized bonds and deposits.

Conclusion

Nigeria’s SEC’s new regulations requiring cryptocurrency companies to complete re-registration within 30 days mark an important step in strengthening digital asset regulation in the country. This move not only demonstrates Nigeria’s emphasis on the potential of the cryptocurrency market, but also reflects its determination to maintain financial order and investor protection. Despite numerous challenges, including fiat currency devaluation and pressure in the foreign exchange market, Nigeria’s cryptocurrency market remains vibrant. At the same time, with the recommendations of the International Monetary Fund (IMF) and the SEC’s exploration of the tokenization space, Nigeria is moving towards establishing a more robust and transparent financial ecosystem. This move is expected to promote the healthy development of the cryptocurrency industry while ensuring the stability and security of the financial system.

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