The Securities and Exchange Commission (SEC) in Nigeria has recently issued a 30-day ultimatum for crypto exchanges and digital asset traders to re-register their businesses or face enforcement actions for non-compliance.
The SEC announced the initiation of the Accelerated Regulatory Incubation Program (ARIP) for Virtual Assets Service Providers (VASPs) as part of their efforts to amend existing rules on digital assets issuance, offering platforms, exchanges, and custody to align with current industry trends.
Despite a two-year ban by the Central Bank of Nigeria (CBN) on banks facilitating crypto transactions, Nigeria has seen significant growth in crypto adoption, ranking second on Chainalysis’ Global Crypto Adoption Index in 2023. The SEC’s directive is a response to the increasing scrutiny and skepticism toward digital assets in the country.
The rise in adoption of digital assets has not been without challenges. Nigerian authorities have accused exchanges like Binance of facilitating money laundering and influencing the foreign exchange market. This led to the detention of Binance executives on charges of tax evasion and money laundering by the Economic and Financial Crimes Commission (EFCC) and the Federal Inland Revenue Service (FIRS).
Despite the challenges faced, Nigeria’s crypto market remains vibrant, prompting the International Monetary Fund (IMF) to recommend the country to adopt a comprehensive regulatory regime for the industry. The SEC is also exploring tokenization and plans to pilot a permissioned liquidity pool comprising tokenized bonds and deposits to ensure the integrity and stability of the financial system amidst the rapid evolution of digital assets.
The SEC’s ultimatum for crypto exchanges and digital asset traders in Nigeria is a step towards regulating the industry and addressing the challenges faced by the increasing adoption of digital assets. It reflects a broader effort to ensure the integrity and stability of the financial system in the country.
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