In a significant move to regulate the burgeoning digital asset market, Nigeria’s Securities and Exchange Commission (SEC) has issued a directive to all cryptocurrency exchanges and digital asset traders operating within the country. They have been given a strict 30-day window to comply with a re-registration process or face potential enforcement actions.
This announcement comes as part of Nigeria’s broader efforts to establish a more structured regulatory framework for digital assets. The SEC’s initiative, known as the Accelerated Regulatory Incubation Program (ARIP), aims to align the rules governing digital assets issuance, offering platforms, exchanges, and custody services with the latest industry trends.
The SEC’s directive underscores the rapid growth of crypto adoption in Nigeria, which has seen a significant increase despite previous restrictions imposed by the Central Bank of Nigeria (CBN) on banks facilitating crypto transactions. Nigeria ranked second on Chainalysis’ Global Crypto Adoption Index in 2023, a notable rise from its previous 11th position.
The move to tighten regulations around digital assets trading in Nigeria is also a response to concerns about the potential risks associated with the sector. Earlier this year, the SEC had warned against fraudulent entities misusing the name of prominent crypto exchanges like Binance, highlighting the dangers of total investment losses due to the volatile nature of digital assets.
The SEC’s ultimatum reflects a growing trend among global regulators to bring clarity and security to the digital asset space. With Nigeria’s economy facing challenges, including the devaluation of its fiat currency, the naira, the government has been keen on cracking down on exchanges that facilitate trades via peer-to-peer markets, which have been accused of influencing the foreign exchange market and facilitating money laundering.
Despite these hurdles, Nigeria’s crypto market remains vibrant. The International Monetary Fund (IMF) has recommended that the country adopt a comprehensive regulatory regime for the industry to address some of its economic issues. The SEC is also exploring the potential of tokenization and plans to pilot a permissioned liquidity pool comprising tokenized bonds and deposits.
As the deadline approaches, crypto exchanges and digital asset traders in Nigeria are urged to take immediate action to ensure compliance with the new regulations. The SEC’s firm stance is a clear indication that the era of unregulated digital asset trading in Nigeria is coming to an end, paving the way for a more secure and stable financial ecosystem.
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