Nigerian exchanges discouraged by SEC crypto license requirements

CointelegraphPublished on 2023-12-30Last updated on 2024-01-01

Abstract

The Nigerian Securities Exchange Commission (SEC)’s crypto license requirements will significantly reduce the number of local crypto exchanges operational in the country despite the Central Bank of Nigeria (CBN) lifting restrictions on Nigerian banks facilitating cryptocurrency transactions, according to Nigerian crypto analyst Rume Ophi.
In an interview with Cointelegraph, Rume explained that many local exchanges cannot afford to be operational due to the cost of the minimum paid-up capital requirement of $556,620 (N500 million naira). He said this requirement would result in mainly foreign exchanges being operational in Nigeria instead of having a healthy balance.
In May 2022, the Nigerian SEC published a 54-page document titled “New Rules on Issuance, Offering Platforms and Custody of Digital Assets” on its website.
This document opens doors for cryptocurrency service providers in Nigeria and details a guideline for banking and financial institutions of the country on how they may interact with digital assets.
As per the SEC’s regulation, exchanges must obtain a virtual asset service provider (VASP) license from the SEC by complying with the requirements of application processing, registration fee and other applicable fees.
Related: Nigeria’s Yellow Card anticipates crypto boom as central bank lifts ban
A global survey featuring respondents from 15 countries indicates that Africa’s largest economy, Nigeria, has the most cryptocurrency-aware population in the world. In Chainalysis’ 2020 Cryptocurrency Geography Report, Nigeria ranked eighth in crypto adoption and usage rate among 154 countries included in the study.
However, the country’s crypto adoption rate is expected to have encouraged more foreign crypto investment, but the reverse is the case. Rume emphasized that the ban on financial institutions from servicing crypto exchanges was to be blamed for the low investment rate.
Rume explained that the recent CBN ban lift would also enable Nigeria’s crypto foreign investment to rise and facilitate the employment of locals in Web3 and the crypto industry.
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