Key Points:
– The Nigerian Securities and Exchange Commission (SEC) has implemented new regulations for cryptocurrency firms.
– Virtual Assets Service Providers (VASPs) must now establish a physical office in Nigeria to be eligible for the SEC’s framework program.
– The CEO or Managing Director of VASPs must reside in Nigeria to ensure local accountability.
– Non-compliant VASPs could face fines starting at 5 million naira ($3,194).
The Nigerian SEC has introduced new rules for cryptocurrency firms operating in the country. In order to be eligible for the SEC’s framework program, Virtual Assets Service Providers (VASPs) must now establish a physical office within Nigeria. This requirement is part of the Accelerated Regulatory Incubation Programme (ARIP), which aims to onboard VASPs in Nigeria.
According to the SEC’s website, entities must be incorporated in Nigeria to qualify for the ARIP. Additionally, the CEO or Managing Director of these firms must reside in Nigeria to ensure local accountability. These rules apply to all crypto-related businesses serving Nigerian consumers, including platforms that facilitate offering, trading, exchange, custody, and transfer of virtual or digital assets.
In a circular released on June 21, the SEC directed all existing and prospective VASPs, including crypto brokers and dealers, to complete their applications via the SEC ePortal within 30 days. While the SEC may amend rules on Digital Assets Issuance, Offering Platforms, Exchange, and Custody in the future, VASPs will have to operate under the ARIP for now.
The ARIP serves as a temporary framework, providing provisional approval for operations until the Digital Assets Rules are fully operational. Its purpose is to accelerate the onboarding process for entities seeking SEC registration.
To apply for the ARIP, VASPs must meet certain requirements. This includes providing a sworn statement confirming no fraud or dishonesty convictions, an operational plan, and a business model with a clear value proposition. Applicants must also provide evidence of the required shareholder funds. The processing fee for ARIP applications is 2 million naira ($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.
Non-compliance with the new regulations can result in penalties. VASPs that fail to meet ARIP requirements may face fines starting at 5 million naira ($3,194), with an additional 200,000 naira ($128) charged daily for continued default. Unregistered commercial VASPs face even higher penalties, with fines of at least 20 million naira ($12,776). Other digital investment platforms, such as crypto brokers and advisers, may be fined a minimum of 10 million naira ($6,388) for non-compliance.
These new regulations come at a time when there are ongoing discussions about crypto oversight in Nigeria. In March, the Nigerian SEC proposed an amendment to increase the registration fee for crypto exchanges from 30 million naira to 150 million naira ($18,620 to $93,000).