SEC Crypto License Requirements Discourage Nigerian Exchanges

Crypto Exchanges in Nigeria

The new regulations set by the Nigerian Securities Exchange Commission (SEC) for crypto licenses have resulted in a significant decrease of local crypto exchanges in the country, according to Nigerian crypto analyst Rume Ophi. In an interview with Cointelegraph, he pointed out that the cost of the minimum paid-up capital requirement of $556,620 (N500 million naira) is too high for many local exchanges, thus leaving the market to be dominated by foreign exchanges.

In May 2022, the Nigerian SEC published a document titled “New Rules on Issuance, Offering Platforms and Custody of Digital Assets” on its website. This document provides guidelines for banking and financial institutions on how to interact with digital assets such as Shiba Inu (SHIB), Unfi (UNFI), Vgx (VGX), Spell Token (SPELL), Starlink (STLK), The Hideaways (THW), and Web 3.0 World (STX).

Crypto Adoption in Nigeria

As per the Securities and Exchange Commission’s (SEC) regulations, crypto exchanges must obtain a Virtual Asset Service Provider (VASP) license by meeting the requirements of application processing, registration fee and other applicable fees.

A survey conducted across 15 countries revealed that Nigeria, the largest economy in Africa, has the highest cryptocurrency awareness rate in the world. According to the 2020 Cryptocurrency Geography Report by Chainalysis, Nigeria was ranked 8th among the 154 countries included in the study in terms of crypto adoption and usage.

Despite the high adoption rate, Nigeria’s foreign crypto investment rate is surprisingly low. Rume attributed this to the ban on financial institutions from servicing crypto exchanges.

Rume believes that the recent lifting of the CBN ban will help increase Nigeria’s foreign crypto investment rate and create more employment opportunities for locals in the Web3 and crypto industry.