Nigeria’s SEC updates regulations on crypto issuance and custody

The Nigerian Securities and Exchange Commission (SEC) has issued new amendments to its rules on Digital Asset Issuance, Offering Platforms, Exchange, and Custody. The updated regulations are intended to improve the regulatory framework and ensure it is comprehensive and responsive to crypto’s unique challenges.

The SEC emphasized the need to adjust its rules to better align with the market’s current realities. To facilitate this transition, the SEC has introduced a special window for onboarding Virtual Assets Service Providers (VASPs) through the Accelerated Regulatory Incubation Programme (ARIP).

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This initiative aims to bring both existing and prospective VASPs into compliance with the new regulations. The agency has directed all VASPs to visit the SEC ePortal and complete the application process within 30 days of the circular’s issuance.

How the program works

The Regulatory Incubation (RI) program is designed for new business models and processes that are currently conducting full or ancillary Capital Market activities using technology without the necessary authorization.

This program serves as an interim measure to support the development of effective regulation without compromising market integrity. Based on an initial assessment, it will admit eligible business models and processes in batches over a one-year period.

The SEC has urged stakeholders in the capital market to view innovation as a driver of growth, efficiency, transparency, and resilience. At the 2024 Capital Market Solicitors Association Annual Business Summit in Lagos, Emomotimi Agama, the SEC’s Director General, stated that the Commission is committed to adapting its regulations to address the emerging financial products and services driven by technology.

The Commission has a three-pronged approach to regulating innovation: safety, market deepening, and solutions to problems. This approach helps create a more efficient and reliable capital market ecosystem.

Emomotimi Agama

However, as the market embraces innovation, Agama warned of the associated risks, including cybersecurity threats, regulatory complexities, and market volatility. He added, “While the potential of innovation is undeniable, we must ensure appropriate safeguards are in place to protect investors and maintain market stability.”

Jai Hamid