Nigeria's crypto watchdog embarks on policy fix
New moves attempt to bring some form of order to a rapidly growing, yet largely unregulated market
Regulation for one of the world’s largest crypto markets is on the brink of major change. The Securities and Exchange Commission (SEC), the industry regulator in Nigeria, recently gave provisional licenses to two local exchanges, Quidax and Busha, for the first time ever.
The issuing, which came a week after the SEC hinted at giving its first set of operating licenses, brings an end to months-long uncertainty around local stance on digital assets.
Licensing is part of a broader move: the Accelerated Regulatory Incubation Program (ARIP), launched in July this year. The program onboards crypto exchanges that had already begun operations before the SEC released rules for virtual asset service providers in May 2022.
Per the regulator, Approvals-in-Principle are a precursor to full registration and are designed to put protections and transparency measures in place.
New actions attempt to bring some form of order to a rapidly growing market largely unregulated regardless of popularity. Millions of Nigerians use crypto to hedge against economic instability and the falling Naira. But, lack of regulatory oversight has brought concerns about fraud, market volatility, and potential illicit activities.
Buchi Okoro, Co-founder and CEO of Quidax said, “The customer is our priority, every decision we make is to ensure that customers transact on our platform easily, safely, and with confidence”.
“We commend the SEC under the leadership of Dr. Emomotimi Agama, for taking the bold step to bring order, confidence, and investor protection to our industry. This is a big win for Nigeria’s embrace of crypto, and we are glad to be a part of this historical moment,” Buchi added.
Michael Adeyeri, CEO of Busha, was also optimistic. “Millions of Nigerian crypto enthusiasts and users deserve safe and moderated local venues for managing and trading crypto-assets, and this is an overdue step to sanitise the space for the benefit of the economy, in line with global expectations,” he posted on X.
Nigeria has a love-hate, back-and-forth relationship with crypto. So far, it's anything but straightforward. In early 2021, the CBN, the country’s apex bank, banned financial institutions from facilitating crypto transactions, which metamorphosed into a regulatory setback for the market.
The ban did little to curb the rush. Peer-to-peer (P2P) trading quickly became the go-to, and the market continued to grow in the face of restriction. By 2023, a Chainalysis report ranked Nigeria among the top 10 crypto-adopting countries in the world.
In December 2023, the CBN began walking back its ruling, allowing banks to operate accounts for licensed crypto exchanges. A junction in the jungle, it elicited high hopes. Lasberry Oludimu, an exec from Yellow Card, one of Nigeria’s oldest exchanges, told Bendada.com back in February it was a turning point.
“It is not [actually] a strange string of developments because Nigeria is more open-minded compared to a lot of other African countries where the regulators are unwilling to negotiate. In some of these markets, customers are left to trade with the operators at their own risk,” she shared in the interview.
Yet, the government remained largely pragmatic. In February 2024, the state blamed P2P trading for the volatility in foreign exchange, leading to increased scrutiny. The SEC itself considered outlawing P2P trading altogether— many feared it would further stifle the market.
Around this time, the SEC intensified efforts to regulate, citing concerns over currency manipulation and illicit financial activities. Relations with crypto exchanges were reportedly often tense, with the SEC urging them to delist the naira from P2P trading.
The SEC’s Director General, Emomotimi Agama, acknowledged the essence of a regulatory framework balancing innovation with market integrity. It would align Nigeria with other jurisdictions adopting frameworks for virtual asset providers, such as the European Union’s Markets in Crypto-Assets (MiCA) regulation of June 2023.
The regulator wants to attract more investors by prioritizing consumer protection and transparency. However, the road is likely long. Previous actions, including the freezing of wallets linked to recent protests and blocking crypto websites, have created distrust. There are concerns licensing may be overly bureaucratic or subject to arbitration.
For millions who have embraced crypto, the news is a sign the state is starting to come to terms with the upsides of a well-regulated market. As the country navigates the landscape’s complexities, regulators take center stage in the play to harness the benefits while mitigating risks.
