The Nigerian Securities and Exchange Commission (SEC) has announced its plans to issue licenses to cryptocurrency exchanges operating in the country. This move is part of a broader strategy to regulate the rapidly growing cryptocurrency market in Nigeria.
The announcement was made by the SEC’s Chief, Emomotimi Agama, during an interview with Bloomberg, where he highlighted the importance of regulating the sector to protect young Nigerians who are heavily involved in cryptocurrency trading.
“Nigeria has one of the fastest-growing crypto economies in the world, and we must support the youths of this country to be able to achieve the benefits that accrue in fintech,” Agama stated.
He emphasised that the licensing of crypto exchanges is essential to ensure that the market remains transparent and free from manipulation. “Being a crypto and fintech enthusiast, I can tell you without doubt that this is going to happen sooner than you think,” Agama added.
In June 2024, the Nigerian SEC launched a new program aimed at speeding up the registration process for Virtual Asset Service Providers (VASPs). This initiative was part of a broader effort to adapt to the growing demand for cryptocurrency in Nigeria. Alongside this, the SEC announced amendments to its rules on digital asset issuance, offering platforms, exchanges, and custody.
Nigeria has seen an explosive growth in the adoption of cryptocurrencies. According to various reports, the country was named the second-largest economy in terms of crypto adoption last year.
In August 2022, Nigeria was recognized as the most crypto-crazy country by the volume of Google searches related to cryptocurrencies.
This high demand has pushed the Central Bank of Nigeria (CBN) to reconsider its stance on cryptocurrencies. Earlier this year, the CBN lifted restrictions on Nigerian banks facilitating cryptocurrency transactions, ending a two-year ban.
The CBN acknowledged that the rapid growth of the sector and its massive potential made it impractical to continue upholding stringent measures.
“It was improper to continue with such stringent measures in a sector that is growing so fast and has massive potential,” a CBN official stated. This shift in policy marks a significant change in the Nigerian government’s approach to cryptocurrencies.
Despite the positive steps towards regulation, the cryptocurrency sector in Nigeria has faced significant challenges. Earlier this year, several top cryptocurrency exchanges, including OKX and Binance, delisted Naira peer-to-peer (P2P) trading and stopped Naira withdrawals on their platforms.
These actions were taken following accusations of currency manipulation and money laundering by Nigerian authorities.
The crackdown on these exchanges led to a decline in the availability of Naira-based crypto trading options, causing concern among Nigerian crypto enthusiasts.
The SEC’s latest move to issue licenses to crypto exchanges represents a 360-degree turnaround in policy. The regulatory body had previously been involved in the crackdown on cryptocurrency entities, but the new licensing initiative indicates a shift towards a more collaborative approach.
Agama explained that the SEC’s goal is to create a regulated environment where cryptocurrency dealings are transparent and free from bad actors.
“The SEC wants to provide a platform where people can formally do these things, and we are able to get all of the information that we need,” he said. However, Agama also warned that the SEC would not tolerate the use of cryptocurrency to manipulate Nigeria’s currency.
