By Michael Scott
According to Kue Barinor Paul, a Web3 legal representative in Nigeria, the nation’s crypto exchanges and VASPs might join to afford the SEC regulation requirement.
Rume Ophi, a Nigerian crypto analyst, claimed that the nation’s Securities and Exchange Commission (SEC) must revisit the virtual asset service providers (VASP) regulations to enable crypto exchanges to acquire approvals.
Industry Leaders Urge the Nigerian Authority to Develop Friendly Licensing Regulation
In an interview, he said the present regulations offered by the Securities and Exchange Commission to govern VASPs’ registration are unfavourable to indigenous exchanges. Besides, he told local exchanges must be prioritized when preparing the regulations.
Exchanges should acquire a VASP approval from the Securities and Exchange Commission by abiding by the application processing requirements, a registration fee, and other required fees.
Ophi noted that most local exchanges cannot afford 500M naira ($556620), the minimum upfront capital requirement. This will mainly lead to active foreign exchanges in the nation rather than having a perfect balance.
The analyst urges amendment to the licensing requirements for the SEC to facilitate the participation of indigenous crypto exchanges. Doing so is critical to avoid leaving a critical and budding sector of Nigerian economy as the playground for foreign-owned and controlled entities.
Nigeria Lacks Healthy Balance in Crypto Licensing
Kue Barinor Paul, a Nigerian Web3 legal representative, supported Ophi’s perspective by saying that the nation’s crypto exchanges and virtual asset service providers might join forces to afford the SEC’s approval requirement.
Paul claimed that the SEC must revise the model for license registration since the present requirements are primarily friendly to foreign exchanges. The Nigerian Securities and Exchange Commission printed a document titled ‘New Rules on Issuance, Offering Platforms and Custody of Digital Assets’ in May 2022.
This document unlocks opportunities for providers of cryptocurrency services in the country and explains regulations concerning the interaction of banking and financial institutions with digital assets.
High Adoption of Crypto in Nigeria
Further, Ophi revealed that the National Assembly of Nigeria must participate. This will ensure that the SEC’s licensing guidelines conform to the present realities of the nation’s economy.
An international survey of participants from 15 nations claimed that Nigeria, Africa’s biggest economy, has the greatest cryptocurrency awareness levels globally. Chainalysis ‘2023 Cryptocurrency Geography Report’ shows that Nigeria was ranked second out of the 154 nations evaluated for crypto adoption.
Nigeria’s expected high crypto adoption would attract more foreign crypto investment. Nevertheless, Ophi links the reduced investment rate to the latest removal of the veto on financial institutions that serve crypto exchanges.