Nigeria's SEC to License Crypto Exchanges, Targeting Fast-Growing Market

The commission plans to issue these licenses in response to the nation's increasing adoption of digital assets.

Nigeria’s Securities and Exchange Commission (SEC) is reportedly preparing to license cryptocurrency exchanges in a bid to regulate the burgeoning crypto market in the region. The move comes amid increasing adoption of digital assets in the country.

According to a report by Bloomberg, the SEC could start issuing the licenses as early as this month. In this regard, Director-General Emomotimi Agama highlighted the need for a formal platform to enable crypto transactions.

This platform, in turn, will allow the SEC to collect necessary data while promoting the benefits of the market, particularly for the youth in Nigeria.

Nigeria’s Checkered Relationship with Cryptocurrency

In 2021, the Central Bank of Nigeria (CBN) banned banks from processing crypto transactions, citing concerns over the stability of the naira. In response, the Nigerian crypto community largely shifted to peer-to-peer (P2P) transactions to continue trading.

Despite the ongoing crackdowns, including a case against Binance in Feb. 2024 where executives were accused of contributing to the naira’s depreciation, the adoption of digital assets has continued unabated.

The Nigerian government’s tough stance has failed to dampen the enthusiasm of crypto proponents in the country, who remain resilient despite the regulatory hurdles.

The SEC’s move to license exchanges could mark a turning point, potentially leading to a more structured and supportive environment for the Nigerian crypto market.

How the New Regulations Might Impact Nigeria’s Crypto Market

The SEC’s decision to license crypto exchanges is a major step towards standardizing Nigeria’s digital asset market. By instituting a regulated framework, the commission aims to create a safer, more transparent environment for investors and traders.

According to Chainalysis, Nigeria’s crypto transaction volume increased by 9% to $56.7 billion in June 2023. However, Director-General Agama said this figure likely underrepresents the true scale of the market, as many transactions go unreported.

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