The Securities and Exchange Commission (SEC) of Nigeria is set to enhance enforcement actions against businesses and individuals engaging in cryptocurrency transactions without appropriate regulatory oversight. This announcement, made by Emomotimi Agama, the director-general of Nigeria’s SEC, underscores the country’s commitment to regulating the burgeoning crypto sector to safeguard investors.
On September 9, local news outlet Nairametrics reported that Nigeria’s SEC is preparing to take decisive steps against entities providing cryptocurrency services without the necessary licenses. This move comes shortly after the issuance of the first provisional operating licenses to two local crypto exchanges, marking a significant development in the regulatory landscape.
Agama highlighted the importance of compliance within the crypto industry, stating: “We are certainly going to commence enforcement actions on anyone who wants to operate in this market without the intention of being regulated. For those that do not want to play by the books, we will not allow them to operate within our space.”
Current State of Crypto Regulation in Nigeria
As of now, only two cryptocurrency exchanges—Busha Digital and Quidax Technologies—have been regulated by the Nigerian SEC, receiving their licenses on August 29. These platforms represent the initial steps towards establishing a regulated framework for digital assets in Nigeria, driven by the increasing interest among the nation’s youth.
The recent approvals signify a move towards a structured regulatory environment that balances investor protection with the encouragement of innovation. Agama also noted that the SEC’s regulatory oversight would extend to enforcing Anti-Money Laundering and Combating the Financing of Terrorism protocols.
Despite these advancements, the regulatory approach in Nigeria has been marked by inconsistency and ambiguity, which has been a point of contention among industry observers. Nigeria, one of the world’s major crypto markets, has seen varying regulatory directives over the years:
- 2021: The Central Bank of Nigeria (CBN) implemented a comprehensive ban on cryptocurrencies, prohibiting financial institutions from servicing crypto exchanges.
- 2022: The Nigerian SEC introduced a regulatory framework specifically targeting crypto exchanges.
- 2023: The CBN lifted the ban on cryptocurrency transactions.
- 2024: New regulations were introduced to restrict peer-to-peer crypto exchange using the Nigerian naira.
International cryptocurrency exchanges, such as Binance, have also felt the impact of Nigeria’s stringent regulatory measures. Despite Binance’s decision to cease operations in Nigeria in March 2024, local law enforcement has continued to detain its executives. Tigran Gambaryan, head of financial crime compliance at Binance, has been in custody for over six months, with a bail decision expected in October.
Nigeria’s evolving stance on cryptocurrency regulation reflects a broader attempt to integrate digital assets into a formal economic framework while addressing the potential risks associated with their trade. As the SEC moves forward with its enforcement plans, the global crypto community and local investors are keenly watching how these regulations will shape the market dynamics and investment landscape in one of Africa’s most vibrant economies.
Featured image credit: DALL-E by ChatGPT
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