The Securities and Exchange Commission (SEC) of Nigeria has granted approval in principle to two digital asset exchanges, Busha Digital Limited and Quidax Technologies Limited. This provisional crypto license allows the firms to begin operations under the Accelerated Regulatory Incubation Programme (ARIP). The ARIP cohort includes two digital asset exchanges, four digital asset offering platforms, and one digital asset custodian. Busha Digital Limited facilitates the buying and selling of cryptocurrencies using fiat currency through its mobile and web applications. Quidax Technologies Limited runs a cryptocurrency trading platform leveraging blockchain technology, listing and trading existing crypto tokens.
Apart from Busha and Quidax, five other firms have been admitted to test their business models and technologies under the SEC’s Regulatory Incubation Program (RI). These companies include Trovotech Ltd, Wrapped CBDC Ltd, HousingExchange.NG Ltd, Dream City Capital, and Blockvault Custodian Ltd. The ARIP was established by the SEC for firms that had already begun operations before the Rules on Virtual Asset Service Providers were issued in May 2022. The RI Programme aims to evaluate the business models of digital asset companies and test innovative products, services, and technologies under SEC supervision. These approvals-in-principle are a preliminary step toward full registration and are the sole avenues for entities to introduce their digital products and services in the Nigerian capital market.
In June, the Blockchain Industry Coordinating Committee of Nigeria (BICCoN) expressed concerns over the legal disputes between cryptocurrency exchange Binance and the Nigerian government. BICCoN noted the potential implications for Nigeria’s blockchain ecosystem and international reputation due to ongoing legal battles and detention of Binance executives. The atmosphere of uncertainty and risk could deter potential investors and partners. US lawmakers, French Hill and Chrissy Houlahan, visited Kuje Prison in Nigeria, where a detained Binance executive, Tigran Gambaryan, is held. Gambaryan faced tax evasion charges, but a court ruling cleared him of these charges. However, he still has a money laundering case to resolve. Binance CEO Richard Teng accused a Nigerian government official of pressuring crypto representatives to accept a secret agreement to settle Nigeria’s claims against the exchange.
The SEC’s approval in principle for digital asset exchanges and other firms reflects Nigeria’s efforts to regulate the cryptocurrency market and integrate digital assets into the capital market. The ARIP and RI programs provide a controlled environment for companies to test their products and services under SEC supervision. By providing a pathway for registration and operation, these programs aim to foster innovation while ensuring compliance with regulatory standards. The involvement of international lawmakers and the detention of Binance executives highlight the complex legal and regulatory landscape surrounding cryptocurrencies in Nigeria, emphasizing the importance of clear and balanced approaches to resolving disputes and maintaining a favorable environment for blockchain industry growth in the country.
BICCoN’s concerns over the potential damage to Nigeria’s reputation from the legal disputes between Binance and the government underscore the need for transparent and fair regulatory processes in the cryptocurrency sector. The international attention brought by US lawmakers visiting detained Binance executives highlights the global implications of such legal conflicts. Resolving these issues in a manner that upholds legal standards and due process is crucial for maintaining investor confidence and fostering a vibrant blockchain ecosystem in Nigeria. The SEC’s initiatives, such as the ARIP and RI programs, demonstrate a proactive approach to regulating digital assets while providing a framework for innovation and compliance within the cryptocurrency industry, positioning Nigeria as a key player in the evolving landscape of digital finance.
