Policy
Crypto exchanges Quidax and Busha receive ‘in-principle approval’ as Nigeria moves to regulate crypto industry.
After months of heightened uncertainty fueled by the Nigerian government’s crackdown on peer-to-peer cryptocurrency trading, the country’s Securities and Exchange Commission (SEC) has granted “approval in principle” to two digital asset exchanges, marking a significant shift in the country’s approach to cryptocurrency regulation.
The details
- On August 29, the SEC announced that Busha Digital Limited and Quidax Technologies Limited were authorized to commence operations under the ARIP.
- This comes two months after the SEC introduced the Accelerated Regulatory Incubation Program (ARIP), a “sandbox”-style regime under which the Commission seeks to grant provisional approvals to digital asset companies as it seeks to better understand the sector.
- Four additional companies have been approved to test their models under the SEC’s Regulatory Incubation (RI) program.
- One of the other four companies is Wrapped CBDC Ltd, the entity behind cNGN, a naira-pegged stablecoin that is reportedly backed by a consortium of financial institutions, fintech innovators and blockchain experts.
- These approvals are part of the SEC’s efforts to enable innovation while ensuring investor protection in the digital asset space.
- ARIP was introduced to onboarding companies that had started operations before the publication of the Virtual Asset Service Provider rules in May 2022.
- The RI program aims to evaluate the business models of digital asset companies and test innovative products in a controlled environment.
Key Quote
“The results of the process will inform the development of new policies in this area. The tests will be conducted in the short term and on a small scale, and the SEC will continue to work with participating companies to agree on test parameters and robust consumer safeguards.”
Approved companies and their functions
Two digital asset exchanges
Busha Digital Limited:
- Facilitates the buying and selling of crypto assets with fiat currency
- Enables core digital asset investment services in Nigeria and other developing economies
Quidax Technologies Limited :
- Operates a cryptocurrency trading platform in Nigeria
- Uses a proprietary blockchain to list and trade crypto tokens
Four digital asset offering platforms:
- Trovotech Ltd: Focuses on Tokenization of Illiquid Real-World Assets as Securities
- Wrapped CBDC Ltd: Project to introduce a stablecoin issued by Nigeria (cNGN)
- HousingExhange.NG Ltd: Aims to Enable Real Estate Tokenization and Investment
- Dream City Capital: Development of a digital real estate investment platform
A digital asset custodian:
Blockvault Custodian Ltd: Provides secure infrastructure for storing and managing digital assets
Before now
This development comes after months of uncertainty in the Nigerian crypto space, including:
And then?
- The SEC stressed that only approved digital exchanges and platforms are legally allowed to transact cryptocurrencies in Nigeria.
- The commission warned the public against dealing with unauthorized operators and advised potential investors to verify the legitimacy of investment services through the SEC’s information portals.
- This regulatory change could potentially ease tensions between cryptocurrency businesses and Nigerian authorities, perhaps paving the way for clearer guidelines and a more structured approach to cryptocurrency operations in the country.
