Nigeria: SEC Announces Stricter Regulations for Digital Assets Operations

The Securities and Exchange Commission (SEC) has unveiled its intention to enhance and update guidelines governing the operations of digital assets and virtual assets service providers (VASPs) within the country. This move, as highlighted in an update from the SEC obtained by The PUNCH on Wednesday, aims to fortify the country’s capital market against illicit activities and ensure the exclusion of criminals from the market.

The announcement comes shortly after the recent decision by Binance, a cryptocurrency exchange, to discontinue naira services on its platform following disputes with the Federal Government. The government had accused the platform of manipulating the value of the naira through speculative activities on its platform.

In a notice dated March 4, the SEC outlined its commitment to implementing an updated Anti-Money Laundering (AML), Counter Financing of Terrorism (CFT), and Counter Proliferation Financing (CPF) onboarding manual. This manual will facilitate the licensing/registration and ongoing screening of Digital and VASP Beneficial Owners, ensuring that individuals with criminal intent are not registered as operators in the capital market.

The SEC expressed its willingness to engage with legitimate VASPs based on these transparent rules and regulations.

Furthermore, the SEC disclosed ongoing collaboration with the Central Bank of Nigeria (CBN), resulting in updates to its rules. These updates are set to be exposed to the market for public comment before final approval. To aid potential applicants and the public, relevant Rules and Regulations issued by the SEC on the regulation of Digital Assets and VASPs have been compiled.

It’s noteworthy that the Central Bank of Nigeria had lifted the ban on crypto transactions in December 2023, providing operational guidelines on virtual assets service providers to all banks and financial institutions. The SEC, in September 2020, had outlined its regulatory jurisdiction over various types of crypto tokens and continued to issue regulations in subsequent years, including those focused on AML, targeted financial sanctions, and other general requirements for virtual assets service providers.

These measures collectively demonstrate the commitment of regulatory authorities to ensure the integrity and cleanliness of the digital assets space in the country.