Nigeria's Securities and Exchange Commission (SEC) granted "Approval-in-Principle" to two digital asset exchanges, Busha Digital Ltd. and Quidax Technologies Ltd., marking a significant step in regulating cryptocurrency trading in the country. This approval is part of the SEC’s Accelerated Regulatory Incubation Programme (ARIP), designed to facilitate the entry of firms into the market while ensuring investor protection and market integrity.
In addition to the two exchanges, the SEC has admitted five other firms to its Regulatory Incubation (RI) Programme. Under the SEC's close supervision, these firms will test their business models, technology, and products in a real-time market environment. The companies involved in the RI Programme include Trovotech Ltd., Wrapped CBDC Ltd., HousingExchange.NG Ltd., Dream City Capital, and Blockvault Custodian Ltd.
Efe Ebelo, the SEC spokesperson, emphasized that these approvals are preliminary steps leading to full registration. The ARIP is aimed at integrating firms that began operations before the SEC’s Rules on Virtual Asset Service Providers were established in May 2022, while the RI Programme focuses on evaluating and refining new business models and technologies.
“The current cohort reflects the growing use of distributed ledger technology (DLT) in the creation and trading of crypto assets,” Ebelo noted. “The outcomes of these regulatory processes will be pivotal in shaping future policy developments in the cryptocurrency sector.”
The SEC's move to approve these exchanges and platforms aligns with its ongoing commitment to fostering innovation in Nigeria’s capital markets while ensuring robust consumer protections. The approval-in-principle signifies that these firms have met initial regulatory criteria, though they must still undergo further assessments before receiving full registration.
Ebelo advised the public to engage only with entities that have received formal SEC approval through the ARIP or RI Programme. She cautioned against dealing with unapproved operators and encouraged potential investors to verify the legitimacy of investment services through SEC information portals.
This regulatory action comes amid a backdrop of growing cryptocurrency adoption in Nigeria, despite past regulatory hurdles and skepticism. Nigeria remains one of the leading countries in global cryptocurrency trading, with a vibrant market and a significant number of users.
However, challenges persist, including recent controversies involving crypto exchanges and alleged manipulation of the Nigerian currency through peer-to-peer (P2P) trading. Critics have pointed to the Central Bank of Nigeria's (CBN) policies as contributing to these issues, highlighting the need for clearer and more supportive regulatory frameworks.
As Nigeria navigates its evolving stance on digital assets, the SEC’s regulatory programmes represent a critical effort to balance innovation with regulatory oversight, ensuring a secure and transparent environment for cryptocurrency activities.
