In a move that could potentially reshape the crypto-currency landscape in Nigeria, the Securities and Exchange Commission (SEC) has proposed new regulations that could spell doom for the industry. These regulations, if enacted, would impose stringent requirements on virtual assets service providers (VASPs) operating in the country.
The proposed rules mandate that no entity can provide virtual assets services without being registered with the Commission. Furthermore, companies seeking to operate as VASPs must be incorporated in Nigeria and have a physical office within the country. Key provisions include capital requirements, ownership restrictions, and investment limits.
Under these regulations, VASPs are required to have a minimum paid-up capital of N1 billion (or $640,000), provided they are operating either as custodians, digital asset exchanges, or digital asset offering platforms. Additionally, directors and senior management must collectively own at least 50% equity in the issuer of digital assets.
These regulations are a far cry, for example, from those of Mauritius, known as an African pioneer in blockchain regulation. In Mauritius, the capital requirements for virtual asset marketplaces and custodians are significantly lower, set at 6,500,000 Mauritian Rupees and 5,000,000 Mauritian Rupees (or $143,000 and $110,000), respectively.
The Nigerian crypto market, which experienced a 9% year-over-year growth, reaching $56.7 billion in transactions, faces unprecedented regulatory scrutiny. Recent incidents, such as Binance’s decision to suspend services involving the Nigerian naira, have escalated tensions. Binance’s move follows allegations of illicit transactions and regulatory concerns raised by the Central Bank of Nigeria.
Despite favorable regulations, cryptocurrency adoption in Mauritius remains relatively low compared to other African countries.
The proposed Nigerian regulations could have far-reaching implications for the cryptocurrency industry in the country. With increasing regulatory resistance and calls for bans on major crypto exchanges, Nigeria’s status as a burgeoning crypto economy hangs in the balance.
As the regulatory landscape evolves, the fate of crypto adoption in Nigeria remains uncertain. The proposed new rules, if implemented, could push the industry to the brink of permanent extinction, casting a shadow over the future of digital assets in the country.