Nigerian SEC Unveils New Digital Asset Rules, Launches Compliance Program For VASPs

Highlights:

• The Nigerian SEC has amended the rules pertaining to Digital Asset Issuance, Offering Platforms, Exchange and Custody.
• The SEC initiated the Accelerated Regulatory Incubation Programme for VASPs, requiring application updates within 30 days.
• Nigeria’s crackdown on crypto firms continues with the detention of Binance executives over money laundering and tax violations.

The Nigerian Securities and Exchange Commission (SEC) has recently updated its regulations governing Digital Asset Issuance, Offering Platforms, Exchange, and Custody. In an official notice to the public, the SEC stated that it planned to amend these rules to establish a more robust framework that addresses the crypto’s unique challenges.

The regulator said:

[ARIP is] designed for promoters of new business models and processes that are currently carrying out full or ancillary Capital Market activities without the required authorization through the use of technology.”

SEC Introduces the Accelerated Regulatory Incubation Programme for VASPs 

As part of these regulatory changes, the SEC introduced a specialized compliance initiative called the Accelerated Regulatory Incubation Programme (ARIP). This program is specifically designed for virtual asset service providers (VASPs) and provides them with a structured pathway to meet the updated regulatory standards.

According to the circular, the regulator has established a special onboarding window, enabling VASPs to participate in the ARIP. The onboarding process is accessible through the SEC’s ePortal. VASPs are required to complete the onboarding process within 30 days from the date of issuance of the circular. Additionally, the SEC warned VASPs that regulatory action will be taken against those who fail to comply with the instructions. This firm stance highlights the SEC’s dedication to maintaining regulatory discipline within the digital asset sector.

The #Nigerian Securities and Exchange Commission (#SEC) has updated its rules on Digital Asset Issuance, Offering Platforms, Exchange, and Custody.

A new compliance program, the Accelerated Regulatory Incubation Programme (#ARIP), has been introduced for virtual asset service… pic.twitter.com/mLWbLduQlt

— TOBTC (@_TOBTC) June 22, 2024

Recent Developments in Nigeria’s Digital Assets Landscape

The Nigerian SEC has recently updated its regulations on Digital Assets Issuance, Offering Platforms, Exchange and Custody, initially issued in May 2022. These regulatory modifications follow the recent appointment of Emomotimi Agama as the new Director-General of the SEC. 

In March, the Nigerian SEC proposed an amendment to the rules governing platforms that offer crypto services. The amendment proposes raising the registration fee for cryptocurrency exchanges from 30 million naira ($18,620) to 150 million naira ($93,000). In recent years, Nigeria has emerged as one of the fastest-growing crypto economies globally and ranked second-largest in crypto adoption in 2023. Moreover, in August 2022, Nigeria topped the list as the most crypto-focused country globally, based on the number of Google searches for “cryptocurrency” or “buy crypto.”

The crypto adoption in Nigeria encountered obstacles and was not a seamless, organic process. The country cited instances where malicious actors began exploiting digital assets and crypto exchanges for money laundering purposes. This led to the arrest of two Binance executives, Nadeem Anjarwall and Tigran Gambaryan.

Nigeria Detains Binance Executives in Crypto Crackdown

Nigerian agencies arrested Nadeem Anjarwalla, Binance’s Africa Regional Manager, and Gambaryan, Binance’s Head of Financial Compliance, following their arrival in Nigeria’s capital city, Abuja. On Feb. 28, authorities filed criminal charges against Binance Nigeria and its two executives, alleging a $35 million money laundering and tax violation. Anjarwalla escaped custody on March 22, while Gambaryan remains detained.

🇳🇬 Nigeria detains #Binance  executives following crypto exchange ban.

Authorities have confiscated the passports of two Binance executives, an American and a British citizen, according to people familiar with the situation. pic.twitter.com/3M7k4yksJ0

— CediRates (@CediRates) February 28, 2024

Nigeria’s new digital asset regulations follow a visit by two US lawmakers to see detained Binance executive Gambaryan. During their visit, Congressman French Hill (R-LA) and Congresswoman Chrissy Houlahan (D-PA) found Gambaryan was suffering from malaria, double pneumonia, significant weight loss, and inadequate medical care. Hill emphasized the immediate need for Tigran’s humanitarian release, the dropping of remaining charges, and his return to the US.

Yesterday, @RepHoulahan and I visited with US citizen Tigran Gambaryan in Kuje Prison in Nigeria. We found him suffering from the conditions there, as he has malaria and double pneumonia, and he reports that he has lost significant weight. Even worse, he's being denied access to… pic.twitter.com/OKEHMXxuF4

— French Hill (@RepFrenchHill) June 20, 2024

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Disclaimer: Cryptocurrency is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.