Nigeria’s SEC Sets 30-Day Deadline For VASP Application Updates

The Nigerian Securities and Exchange Commission (SEC) has set a 30-day deadline for Virtual Asset Service Providers (VASPs) to update their applications in accordance with newly amended rules regarding Digital Asset Issuance, Offering Platforms, Exchange, and Custody.

This update, conveyed through an official public notice, seeks to strengthen the regulatory framework and ensure better compliance within the digital asset sector. The updated application process is accessible via the SEC ePortal, reflecting the importance of timely submission to adhere to the new regulations.

Regulatory Update and Application Requirements

In March, Nigeria introduced new rules through the Securities and Exchange Commission (SEC) to license, register, and inspect VASPs, reflecting the country’s tightening grip on the digital asset market. This regulatory shift came at a time of increased scrutiny on cryptocurrency exchanges, highlighted by Binance’s recent decision to stop offering Nigerian Naira (NGN) services due to this enhanced regulatory environment.

Binance’s actions showthe heightened regulatory focus on digital asset activities in Nigeria, following its prior legal challenges in the country. As part of this regulatory overhaul, the SEC launched the Accelerated Regulatory Incubation Programme (ARIP), tailored specifically for VASPs to facilitate compliance with the new rules.

According to a circular on the SEC’s website, a special window for the onboarding process has been established through the SEC ePortal, allowing VASPs to participate in ARIP. This initiative requires VASPs to complete their application updates within 30 days from the circular’s date. The SEC has issued a strict warning, emphasizing that non-compliant VASPs will face regulatory actions, highlighting the seriousness of adhering to these new directives.

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Amendments and Industry Impact

The SEC recently revised its Rules on Digital Assets Issuance, Offering Platforms, Exchange, and Custody, originally released in May 2022. This update coincides with Emomotimi Agama’s appointment as the new Director-General, signaling a shift towards more responsible regulation of virtual assets. The focus is now on creating structured rules rather than imposing arbitrary restrictions or shutdowns.

A key proposed amendment in March suggested increasing the registration fee for crypto exchanges from 30 million naira ($18,620) to 150 million naira ($93,000). This significant hike aims to strengthen the regulatory framework and ensure only financially stable and compliant entities operate in the sector.

These changes come as Nigeria has emerged as a major player in the global crypto market, ranking as the second-largest economy in terms of cryptocurrency adoption in 2023. The new regulations seek to strike a balance between accommodating the rapid growth of the crypto market and implementing necessary oversight to ensure its secure and compliant development.

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