This development, announced by the SEC on Thursday, August 29, 2024, is part of the SEC’s Accelerated Regulatory Incubation Program (ARIP), a new initiative aimed at providing a structured framework for digital asset companies to operate under strict regulatory oversight.
The approval represents a significant advancement in the formalization and regulation of digital assets within Nigeria.
Busha Digital Limited and Quidax Technologies Limited, both prominent players in Nigeria’s cryptocurrency sector, are now authorized to offer cryptocurrency trading and related services to the public under the SEC’s close supervision.
The “approval-in-principle” allows these companies to begin operations and further enhance their platforms while undergoing rigorous evaluations to ensure full regulatory compliance.
The SEC highlighted that this preliminary endorsement is a crucial step towards fostering innovation while ensuring investor protection and maintaining market integrity.
The ARIP is designed to strike a balance between encouraging innovation and maintaining a secure, transparent financial ecosystem. The successful implementation of this program could open doors for more digital asset companies to enter the Nigerian market.
The ARIP was introduced to strategically onboard firms that had already commenced operations before the release of the Rules on Virtual Asset Service Providers in May 2022, following calls from stakeholders for more regulation of crypto trading in the country.
The Regulatory Incubation Program was established to assess the business models of Digital Asset firms and to test innovative products, services, and technologies in a real-time market environment under SEC supervision.
The SEC noted that the first set of companies approved will help test its regulatory model, and the outcomes will guide further policy development in Nigeria’s crypto space.
Despite the Nigerian authorities’ previous cautious stance on crypto trading, many Nigerians continue to actively engage with digital assets. Reports on global crypto trading have consistently ranked Nigeria among the top countries for cryptocurrency transactions.
However, stakeholders in Nigeria’s blockchain sector have criticized the Central Bank of Nigeria (CBN) for its policies and actions, which they say have distanced the regulator from the market.
This, they argue, has allowed bad actors to manipulate the Nigerian currency through peer-to-peer (P2P) crypto trading, tarnishing the reputation of legitimate industry players.