Nigeria: SEC Grants ‘Approval in Principle’ to Two Crypto Firms Under New Regulatory Program

The Securities and Exchange Commission (SEC) has granted “Approval-in-Principle” to two digital asset exchanges, Busha Digital Limited and Quidax Technologies Limited, allowing them to commence operations under its Accelerated Regulatory Incubation Program (ARIP).

In a statement released in Abuja, the SEC also announced that five additional firms have been admitted to test their business models and technologies under the SEC’s Regulatory Incubation program (RI). These firms are Trovotech Ltd, Wrapped CBDC Ltd, HousingExchange.NG Ltd, Dream City Capital, and Blockvault Custodian Ltd.

The Commission clarified that this cohort includes two digital asset exchanges, four digital asset offering platforms, and one digital asset custodian.

About the Approved Firms

• Busha Digital Limited operates a digital exchange that allows users to buy, sell, store, and invest in cryptocurrencies using fiat currency. The platform is accessible via both mobile and web applications, facilitating various cryptocurrency transactions, including payments.
• Quidax Technologies Limited offers a cryptocurrency trading platform in Nigeria, leveraging blockchain technology to list and trade pre-issued crypto tokens. Quidax’s platform is accessible on both web and mobile devices, and includes a digital wallet for storing, receiving, and transacting in various cryptocurrencies.

SEC’s Regulatory Programs

The SEC introduced the ARIP to strategically onboard firms that were already operating prior to the release of the Rules on Virtual Asset Service Providers in May 2022. The RI program was designed to evaluate the business models of digital assets firms and test innovative products, services, and technologies in a real-time market environment under close supervision by the SEC.

According to the SEC, the current cohort of the ARIP and RI programs is marked by the increased use of distributed ledger technology (DLT) in creating and trading crypto assets. The outcomes of these tests are expected to inform future policy development in the digital assets space. Tests will be conducted on a short-term and small-scale basis, with the SEC working closely with participating firms to establish testing parameters and robust consumer safeguards.

The SEC emphasized that these “Approvals-in-Principle” are preliminary steps toward full registration, ensuring that appropriate protections and transparency are in place for each product or service.

Legal Authorization and Compliance

The SEC reiterated that only approved digital exchanges and platforms are legally authorized to conduct crypto trading in any form within Nigeria. The ARIP and RI programs remain the only legitimate avenues for entities to introduce their digital products and services into the Nigerian capital market.

The Commission’s move reflects its commitment to fostering innovation in the digital assets sector while ensuring regulatory compliance and consumer protection.