Nigeria’s Securities and Exchange Commission (SEC) has introduced a new requirement for virtual asset service providers (VASPs) mandating that they establish an office in Nigeria to be eligible for its framework program. 

In a post on its website, the SEC stated that entities must be incorporated and have an office in Nigeria to qualify for the Accelerated Regulatory Incubation Programme (ARIP), which is designed to onboard VASPs in the country.

CEOs must reside locally

Additionally, the CEO or managing director must reside in Nigeria. Applicants must be engaged in investment and securities business and either seek registration or have pending applications related to virtual assets with the SEC.

In a June 21 circular, the SEC directed all existing and prospective VASPs, including crypto brokers and dealers, to complete their applications via the SEC ePortal within 30 days.

While the rules on digital assets issuance, offering platforms, exchange and custody are being amended, VASPs are required to operate under the ARIP for now.

According to the SEC, the ARIP aims to accelerate the onboarding process for entities seeking SEC registration. It provides a temporary approval in principle until the Digital Assets Rules are fully operational.

This framework applies to virtual asset service providers and token issuers conducting business in Nigeria or offering services to Nigerian consumers, including platforms facilitating the offering, trading, exchange, custody and transfer of digital assets.

Fines for VASP noncompliance

Application requirements include a sworn statement confirming no fraud or dishonesty convictions, an operational plan, a business model with a clear value proposition and provisions for investor protection. 

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The processing fee is 2 million naira ($1,277), and applicants must provide evidence of required shareholder funds. ARIP participants are expected to submit weekly and monthly trading statistics, quarterly financials, compliance reports and incident reports.

The SEC stated that noncompliance with ARIP requirements could result in penalties starting at 5 million naira ($3,194) and increasing by 200,000 naira ($127.76) daily for continued default.

Unregistered commercial VASPs face penalties of at least 20 million naira ($12,776), while other digital investment platforms, such as crypto brokers and advisers, face fines of at least 10 million naira ($6,388).

In March, Nigeria’s SEC proposed an amendment to the rules guiding platforms offering crypto services, suggesting a hike in the registration fee for crypto exchanges from 30 million naira ($18,620) to 150 million naira ($93,000).

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