The Nigerian Securities and Exchange Commission (SEC) intends to protect investors and promote innovation in the quickly developing cryptocurrency market by enforcing laws on unregulated cryptocurrency enterprises.
Enforcement Actions Against Unregulated Entities to Be Started by the SEC
The SEC intends to file enforcement actions against people and businesses involved in unlicensed bitcoin trading. The Director-General of the Nigerian Securities and Exchange Commission, Emomotimi Agama, declared that the regulatory agency would take severe action against companies that provide cryptocurrency services without the required licensing. Agama claims that this action is in line with the SEC’s dedication to safeguarding investors, particularly those involved in the cryptocurrency industry. He made it clear that companies would not be permitted to function in Nigeria’s financial sector if they did not adhere to regulatory requirements.
Few Licensed Cryptocurrency Exchanges in Nigeria
The SEC’s announcement comes after two nearby cryptocurrency exchanges, Busha Digital and Quidax Technologies, were granted temporary operating licenses on August 29. These are the only two cryptocurrency exchanges that the Nigerian SEC currently has official regulation over. Busha and Quidax are the only exchanges directly supervised by the authorities, despite the fact that there are other SEC-approved businesses in Nigeria pertaining to digital assets. Agama pointed out that the growing interest of young Nigerians in digital assets had a significant impact on these approvals. He also emphasised how crucial it is to have a clear regulatory framework that strikes a compromise between investor protection and innovation.
AML and CFT protocols to be included in the regulatory framework
According to Agama, the SEC will monitor the cryptocurrency industry and implement strict measures pertaining to Combating the Financing of Terrorism (CFT) and Anti-Money Laundering (AML) regulations. By ensuring that all players in the cryptocurrency market follow international norms, this strategy seeks to give investors a safe haven.
Issues with the Cryptocurrency Regulations in Nigeria
Nigeria is home to one of the largest cryptocurrency markets in the world, but its legal framework has come under fire for being vague and inconsistent. The Central Bank of Nigeria (CBN) outlawed cryptocurrencies in its entirety from the beginning of 2021, prohibiting any financial institution from offering services to cryptocurrency exchanges. But the government’s position changed in 2022 when the SEC unveiled a regulation framework aimed at these exchanges.
Changing International Actions and Regulations
The CBN ended the restriction on cryptocurrency transactions by the end of 2023, but not before introducing new rules that go into effect in May 2024 and are intended to restrict peer-to-peer cryptocurrency exchanges that use the Nigerian naira. Global cryptocurrency exchanges like Binance have also been influenced by this changing regulatory landscape. Notwithstanding Binance’s decision to leave Nigeria in March 2024, issues surfaced, such as the imprisonment of Tigran Gambaryan, the company’s Head of Financial Crime Compliance, who is still detained pending an October court ruling on his bail.
