Nigeria’s SEC Grants Approvals to Crypto Operators: A Step Towards Regulation and Acceptance

In a significant move towards the formal acceptance of cryptocurrency in Nigeria, the Securities and Exchange Commission (SEC) has granted operational approvals to several crypto operators. On Thursday, the SEC announced that it had issued approval-in-principle to two Digital Asset Exchanges to commence operations under its Accelerated Regulatory Incubation Program (ARIP). Additionally, five firms have been admitted to test their models and technologies under the Regulatory Incubation Program (RI).

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 aims to onboard firms that were operational prior to the introduction of the Rules on Virtual Asset Service Providers in May 2022, while the RI Program is designed to assess and refine the business models of digital asset firms, enabling them to test their products in a regulated environment.

This initiative aligns with recent comments from Zacch Adedeji, chairman of the Federal Inland Revenue Service (FIRS), who mentioned that the government is drafting an executive bill to regulate the cryptocurrency sector to ensure it contributes positively to Nigeria’s economic development.

The SEC’s approvals signify a pivotal shift in Nigeria’s approach to cryptocurrency, especially in light of previous crackdowns on the sector earlier in 2024. These measures were introduced following the lifting of a ban on official crypto transactions in December 2023, primarily targeting operators accused of contributing to the naira’s volatility and financial misconduct.

Michael Adeyeri, CEO of Busha, expressed his satisfaction with the approval, highlighting the firm’s commitment to security and compliance throughout a rigorous five-year engagement with the regulatory process. These approvals mark Busha Digital Limited and Quidax Technologies Limited as Nigeria’s first licensed crypto operators.

The increase in regulatory oversight comes amid Nigeria’s status as one of the largest peer-to-peer (P2P) crypto markets globally, with substantial transaction volumes reported by Chainalysis. Industry analysts, including Senator Ihenyen, advocate for regulation, emphasizing that formal oversight will enhance consumer protection and investor safety.

The SEC has reiterated that only approved digital exchanges and platforms are authorized to conduct crypto trading in Nigeria, underscoring the importance of the ARIP and RI as essential pathways for legitimate entities seeking to introduce digital products and services to the Nigerian capital market. As the regulatory landscape evolves, the SEC continues to play a vital role in shaping the future of cryptocurrency in Nigeria.