Nigeria’s Securities and Exchange Commission (SEC) recently issued a 30-day ultimatum for crypto exchanges and digital asset traders to re-register their businesses. The warning came with a stern message of enforcement actions against non-compliance. This initiative is part of the Accelerated Regulatory Incubation Program (ARIP) for Virtual Assets Service Providers (VASPs) aimed at bringing the industry in line with current trends.
Despite facing challenges such as a two-year ban on banks facilitating crypto transactions by the Central Bank of Nigeria (CBN), Nigeria has experienced significant growth in crypto adoption. The country even ranked second on Chainalysis’ Global Crypto Adoption Index in 2023, a huge improvement from its previous ranking of 11. However, the rising adoption has not gone unnoticed, with the SEC warning against fraudulent entities misusing the name of reputable exchanges like Binance.
The rapid growth in crypto adoption in Nigeria has not been without its share of challenges. Nigerian authorities accused exchanges like Binance of facilitating money laundering and influencing the foreign exchange market. This led to the government cracking down on exchanges and even detaining Binance executives on charges of tax evasion and money laundering. These challenges have raised concerns about the risks associated with digital assets and the need for stricter regulations to ensure the integrity and stability of the financial system.
Despite the challenges faced by the crypto market in Nigeria, there is still optimism about its future. The International Monetary Fund (IMF) has recommended that Nigeria adopt a comprehensive regulatory regime for the industry to address some of its economic problems. The SEC is also exploring tokenization and plans to pilot a permissioned liquidity pool comprising tokenized bonds and deposits. These efforts demonstrate a commitment to evolving with the industry and protecting investors from potential risks associated with digital assets.
