Key Points:
– The Nigerian Securities and Exchange Commission (SEC) has implemented new regulations for cryptocurrency firms.
– Virtual Assets Service Providers (VASPs) must now have a physical office in Nigeria to be eligible for the SEC’s program.
– The CEO or Managing Director of VASPs must reside in Nigeria for local accountability.
– Non-compliant VASPs could face fines starting at 5 million naira ($3,194).
Nigerian SEC Introduces New Rules for Crypto Firms
The Nigerian Securities and Exchange Commission (SEC) has issued new regulations for cryptocurrency companies operating in the country. The latest rules state that Virtual Assets Service Providers (VASPs) must establish a physical office within Nigeria to be considered eligible for the SEC’s framework program. This requirement is part of the Accelerated Regulatory Incubation Programme (ARIP), which aims to onboard VASPs in the country.
According to the SEC’s website, entities must be incorporated in Nigeria to qualify for participation in the ARIP. Additionally, the CEO or Managing Director of these firms must reside in Nigeria to ensure local accountability. These regulations apply to all crypto-related businesses that serve Nigerian consumers, including platforms that facilitate the offering, trading, exchange, custody, and transfer of virtual or digital assets.
Crypto Firms Must Seek Nigerian SEC Approval Within 30 Days
In a circular released on June 21, the SEC directed all existing and prospective VASPs, including crypto brokers and dealers, to submit their applications through the SEC ePortal within 30 days. The SEC may also amend rules related to Digital Assets Issuance, Offering Platforms, Exchange, and Custody. However, for now, VASPs will need to operate under the ARIP.
The ARIP serves as a temporary framework, granting provisional approval for operations until the Digital Assets Rules are fully implemented. Its purpose is to expedite the onboarding process for entities seeking SEC registration.
Application requirements for the ARIP include a sworn statement confirming no convictions related to fraud or dishonesty. It also calls for an operational plan and a business model with a clear value proposition. Applicants must provide evidence of the required shareholder funds as well. The processing fee for ARIP applications is 2 million naira (approximately $1,277).
Once accepted into the ARIP, participants will be required to submit regular reports to the SEC. These reports include weekly and monthly trading statistics, quarterly financial reports, compliance reports, and incident reports. This level of reporting allows the Nigerian SEC to closely monitor the activities of crypto firms operating in Nigeria.
The Consequences of Non-Compliance
The Nigerian SEC has outlined penalties for non-compliance with the new regulations. VASPs that fail to meet the ARIP requirements could face fines starting at 5 million naira (approximately $3,194), with an additional daily charge of 200,000 naira (around $128) for continuous default. Unregistered commercial VASPs face even higher penalties, with fines of at least 20 million naira (approximately $12,776). Other digital investment platforms, such as crypto brokers and advisers, may be fined a minimum of 10 million naira (about $6,388) for non-compliance.
These new regulations come at a time when discussions about crypto regulation in Nigeria are ongoing. In March, the Nigerian SEC proposed an amendment to increase the registration fee for crypto exchanges from 30 million naira to 150 million naira, a significant increase from approximately $18,620 to $93,000.
