Nigerian Exchanges Struggle to Meet SEC Crypto License Requirements

The Nigerian Securities Exchange Commission’s Crypto License Requirements

The Nigerian Securities Exchange Commission (SEC)’s crypto license requirements will likely lead to a decrease in 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 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 outlines guidelines for banking and financial institutions of the country on how they may interact with digital assets.

In order to prepare for web 3.0, it is important to learn about the technology and how it will work. This includes understanding how web 3.0 is different from web 2.0, and how it will impact businesses. Building a website using web 3.0 technologies also requires knowledge and understanding of the technology.

SEC’s Regulation on VASP Licenses

In order to obtain a virtual asset service provider (VASP) license from the SEC, exchanges must comply with the requirements of application processing, registration fee, and other applicable fees.

Cryptocurrency Adoption in Nigeria

According to a global survey with respondents from 15 countries, Nigeria has the highest cryptocurrency-awareness rate in the world. As reported in Chainalysis’ 2020 Cryptocurrency Geography Report, Nigeria placed eighth in terms of crypto adoption and usage among 154 countries.

Foreign Crypto Investment in Nigeria

Despite its high cryptocurrency adoption rate, Nigeria has not seen a corresponding increase in foreign crypto investment. Rume attributed this to the ban on financial institutions from servicing crypto exchanges.

CBN Ban Lift and Web3 Impact

Rume expressed optimism that the lifting of the CBN ban would bring about an increase in Nigeria’s foreign crypto investment and create more employment opportunities in the Web3 and crypto industry.