Key Takeaways:
- VASPs must establish a physical office in Nigeria for SEC eligibility.
- CEO or Managing Director of VASPs must reside in Nigeria.
- Non-compliant VASPs face fines starting at 5 million naira ($3,194).
LUCKNOW (CoinChapter.com) — Nigeria’s Securities and Exchange Commission (SEC) has introduced new regulations for cryptocurrency firms. Under the new rules, Virtual Assets Service Providers (VASPs) must now establish a physical office within Nigeria to be eligible for the SEC’s framework program. This requirement is part of the Accelerated Regulatory Incubation Programme (ARIP), designed to onboard VASPs in the country.
The SEC stated on its website that entities must be incorporated in Nigeria to qualify for ARIP. Moreover, the CEO or Managing Director of these firms must reside in Nigeria, ensuring local accountability. This applies to all crypto-related businesses serving Nigerian consumers, including platforms that facilitate offering, trading, exchange, custody, and transfer of virtual or digital assets.
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Crypto Firms Must Apply for Nigerian SEC Approval Within 30 Days
In a circular released on June 21, the SEC directed all existing and prospective VASPs, including crypto brokers and dealers, to complete their applications via the SEC ePortal within 30 days. The SEC may amend rules on Digital Assets Issuance, Offering Platforms, Exchange, and Custody. But for now, VASPs will have to operate under the ARIP.
The ARIP serves as a temporary framework, providing provisional approval for operations until the Digital Assets Rules are fully operational. It aims to accelerate the onboarding process for entities seeking SEC registration.
Application requirements include a sworn statement confirming no fraud or dishonesty convictions. It also requires an operational plan and a business model with a clear value proposition. Applicants must also provide evidence of required shareholder funds. The processing fee for ARIP applications is 2 million naira (approximately $1,277).
Once accepted into the ARIP, participants will have to submit regular reports to the SEC. These include weekly and monthly trading statistics, quarterly financial reports, compliance reports, and incident reports. This level of reporting ensures that the Nigerian SEC can closely monitor the activities of crypto firms operating in Nigeria.
The Cost of Non-Adherence to New Regulations
The Nigerian SEC has also outlined penalties for non-compliance. VASPs that fail to meet ARIP requirements could face fines starting at 5 million naira (about $3,194), with an additional 200,000 naira (around $128) charged daily for continued default. Unregistered commercial VASPs face even steeper penalties, with fines of at least 20 million naira (approximately $12,776). Other digital investment platforms, such as crypto brokers and advisers, may be fined a minimum of 10 million naira (about $6,388) for non-compliance.
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These new regulations come amid ongoing discussions about crypto oversight in Nigeria. Earlier in March, the Nigerian SEC proposed an amendment to increase the registration fee for crypto exchanges from 30 million naira to 150 million naira, a hike from about $18,620 to $93,000.
