Nigeria’s SEC to start a crackdown on illegal crypto services

Nigeria, through its Securities Exchange Commission (SEC) is set to start a crackdown on individuals and firms operating outside the confines of its regulations including crypto exchanges, as part of efforts to protect investors and encourage innovation.

This development comes barely a fortnight after the SEC granted licensing to Quidax and Busha as official crypto exchanges in the country. These two are the first exchanges to be licensed and operating under the SEC’s regulations, despite having other related businesses operating in the country.

Nigeria seeks to support youth participation in a regulated environment

SEC Director General Emomotini Agama revealed the country will be taking action against any individuals or firms that undertake cryptocurrency operations without regulatory approvals from the regulator. According to a local media outlet Nairametrics , the move aligns with the commission’s commitment to protect investors and other market participants in the crypto industry.

“We are certainly going to commence enforcement actions on anyone who wants to operate in this market without the intention of being regulated,” said Agama.

“For those that do not want to play by the books, we will not allow them to operate within our space.”

Agama.

Offenders are expected to pay penalties starting from 5 million Naira and additional daily charges for ongoing violations, as per the SEC’s warnings.

Agama indicated that the latest authorization of Quidax and Busha as cryptocurrency exchanges was in line with the growing demand for digital assets by Nigeria’s youth. The move, therefore, is expected to enhance their participation in the industry in a safe environment.

To support the youths in their participation in digital assets as well as create a level playfield, Agama emphasized the need to develop a clear regulatory framework that safeguards investors while promoting inventiveness.

SEC’s regulation of the industry, Agama said will include checks related to anti-monetary laundering (AML) laws, and combating the finance of terrorism (CFT) procedures as vital cogs of the commission’s oversight in the use of cryptocurrency.

Several firms applied for licensing

Agama also revealed that the regulator had received several applications for crypto exchanges but emphasized that approval would be determined by the applicant’s capacity to meet the SEC’s strict regulatory standards.

According to the regulator, the exchanges are required to implement customer verification procedures and report any suspicious activities to authorities. An Invezz article also adds that the exchanges are required to They should also maintain a minimum paid up capital of 500 million naira as well as secure a fidelity insurance bond which covers at least 25% of the amount.

The strict regulatory requirements, according to Agama are in line with the need to protect investors and Nigerian citizens from misinformation and fraud activities, which are prevalent in the digital space.

As such, the crypto exchanges should be supervised intensely to ensure they do not distract the country’s economic performance, while at the same time promoting innovation.

Although innovation remains at the core of SEC’s plans, Agama said the commission would ensure that the industry carries out its operations within clear regulatory rules.

“All these we seek to do without hindering innovation because part of our primary responsibility as the SEC is market development.” Agama.

He said education and a guided regulatory framework were prerequisites to guarantee the dissemination of correct information and operation within the confines of the laws that govern the cryptocurrency space.

On the 29th of August, the commission approved Quidax and Busha as the only two legally registered crypto trading platforms in Nigeria under the SEC’s Accelerated Regulatory Incubation Program (ARIP) program.

This followed the licensing of four other companies to test their models and technology under the Regulatory Incubation (RI) program. These included Trovotech Limited, Wrapped CBDC Limited, Dream City Capital, and Housing Exchange.NG Limited.

SEC also indicated that the aforementioned firms were not the only ones, as several others expressed interest in the ARIP and RI initiatives.

According to the SEC, some applications were still being evaluated and with good chances of getting approvals.