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Nigeria’s Securities and Exchange Commission (SEC) is set to intensify its enforcement actions against unregulated cryptocurrency businesses, aiming to safeguard investors while fostering innovation in the rapidly growing digital asset market.
Emomotimi Agama, the Director-General of Nigeria’s SEC, emphasized the regulator’s determination to act against entities offering cryptocurrency services without proper authorization. Speaking to the media, Agama highlighted that the SEC is committed to ensuring all crypto-related activities are properly regulated to protect investors and maintain market integrity.
“We are definitely moving forward with enforcement actions against those who wish to operate in this space without adhering to regulatory standards,” said Agama. “For those unwilling to comply with the rules, we will not permit them to operate within our jurisdiction.”
Two Crypto Exchanges Regulated in Nigeria
This move follows the SEC’s recent approval of two local cryptocurrency exchanges, Busha Digital and Quidax Technologies, which were granted provisional operating licenses on August 29. These approvals mark the first official recognition of cryptocurrency exchanges by Nigeria’s securities regulator, setting a precedent for digital asset businesses seeking legitimacy in the country.
While other SEC-approved digital asset-related businesses exist, Busha and Quidax are currently the only exchanges under direct supervision by the Nigerian SEC.
Agama noted that the growing interest in digital assets among Nigerian youth was a key driver behind the SEC’s recent regulatory moves. The commission’s oversight will include strict compliance with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) protocols.
Challenges in Nigeria’s Crypto Regulation
Despite Nigeria’s rise as a major player in the global cryptocurrency market, the regulatory landscape has been inconsistent. In early 2021, the Central Bank of Nigeria (CBN) imposed a ban on financial institutions from servicing crypto exchanges, creating uncertainty for the industry. However, the SEC later introduced a regulatory framework in 2022, signaling a shift towards formal oversight of the crypto sector.
In 2023, the CBN lifted the blanket ban on cryptocurrency transactions but introduced new restrictions aimed at limiting peer-to-peer exchanges using the Nigerian naira in May 2024.
Strict Scrutiny of Global Crypto Exchanges
Global exchanges such as Binance have faced stringent scrutiny from Nigerian regulators. Despite Binance’s announcement in March 2024 that it would exit the Nigerian market, local authorities continued their enforcement efforts against the company’s executives. Binance’s head of financial crime compliance, Tigran Gambaryan, was arrested in February and has been held in detention for over six months, awaiting a court ruling on bail expected in October 2024.
As Nigeria continues to navigate its regulatory approach to cryptocurrencies, the SEC’s actions signal a commitment to striking a balance between protecting investors and encouraging innovation in the country’s digital economy.
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