Crypto Firms in Nigeria Are Now Required to Have a Local Base to Be Approved to Operate

Key Points:

• Nigerian SEC requires all virtual asset service providers (VASPs) to establish a physical presence in Nigeria for regulatory approval.
• VASPs, including crypto firms in Nigeria, must apply via SEC’s ePortal within 30 days under the ARIP.
• Proposed SEC amendments include higher registration fees for crypto exchanges.

The Nigerian Securities and Exchange Commission (SEC) has mandated that virtual asset service providers (VASPs) operating in Nigeria establish a physical presence within the country to qualify for regulatory approval.

SEC Mandates Physical Presence for Crypto Firms in Nigeria

In a recent circular dated June 21, the Nigerian SEC outlined requirements under its Acceleration of Regulatory and Innovation Program (ARIP). VASPs, including crypto brokers and dealers, must now register and have a CEO or Managing Director residing in Nigeria. Crypto firms in Nigeria are required to complete their applications through the SEC ePortal within 30 days.

While amendments to rules governing digital assets issuance, platforms, exchanges, and custody are pending, VASPs are mandated to operate under the ARIP. The temporary framework aims to expedite SEC registration processes until the full implementation of Digital Assets Rules.

Proposed SEC Amendments and Regulatory Changes

The ARIP targets crypto firms in Nigeria, including those facilitating digital asset trading, exchange, custody, and transfer. Qualified applicants will receive provisional approval from the SEC, subject to weekly and monthly trading reports, quarterly financials, and compliance audits.

The SEC, responsible for overseeing Nigeria’s capital market, plans to leverage ARIP to streamline registration for entities applying to operate within its jurisdiction.

Earlier in March 2024, the SEC proposed amendments increasing registration fees for crypto exchanges significantly. The new rules also specify conditions for exemption from registration, such as exclusive offering through SEC-registered crowdfunding portals or intermediaries.