Busha, a crypto exchange in Nigeria has gained the much coveted Securities & Exchange commission (SEC) license as a virtual assets service provider (VASP) in Nigeria. The other exchange that gained approval as well was Quidax Technologies limited. Busha enables users to buy and sell crypto with fiat while Quidax is a crypto trading platform that uses blockchain technology. In a press release, over a week ago, SEC Nigeria also says it has admitted 5 other firms to test their models and technology under their Regulatory Incubation (RI) program. SEC says the move is in line with their goal of deepening capital markets while protecting investors.
Despite the above approvals, the SEC Nigeria has issued a stern warning to crypto exchanges operating within the country without proper regulatory approval. In a recent statement, SEC Director-General, Dr. Emomotimi Agama, declared the commission’s intent to commence enforcement actions against any entities or individuals defying the country’s regulatory framework. This announcement underscores the SEC’s commitment to investor protection and ensuring the stability of Nigeria’s financial ecosystem. As more exchanges clamor for approval, the SEC’s tightening grip signals a shift in the country’s approach to regulating digital assets.
SEC Nigeria Tightens Control Over Crypto Market
With the increasing interest in cryptocurrencies among Nigerians, the SEC is seeking to bring more oversight and regulation to the fast-growing sector. Dr. Agama emphasized that the recent approval of Quidax and Busha was motivated by a desire to protect investors while fostering innovation.
As reported by Nairametrics, “The goal is not to stifle the crypto market,” Agama noted, “but to ensure that operators within this space adhere to proper regulations to protect investors and the economy.” The SEC’s new enforcement strategy will target exchanges that fail to meet its stringent standards, which include anti-money laundering (AML) and combating the financing of terrorism (CFT) protocols.
In a market rife with misinformation and the potential for fraud, the SEC aims to shield Nigerian citizens from the risks associated with unregulated exchanges. This crackdown is seen as part of the SEC’s broader initiative to prevent these platforms from contributing to economic instability or illegal activities, such as money laundering or terrorism financing.
Agama stressed that, while the SEC is open to innovation, it will not compromise on regulations meant to safeguard the public and the national economy. “We will not allow those who refuse to follow the rules to operate in our space,” he reiterated.
The Ongoing Regulatory Battle with Crypto Exchanges
Nigeria’s crackdown on crypto exchanges is not new. Tensions have been rising for months, with allegations that unregulated exchanges were involved in currency manipulation and undermining the country’s local currency, the Naira. In February 2024, this conflict reached a boiling point when the Nigerian government pressured exchanges like Binance, KuCoin, and OKX to halt operations related to the Naira, cutting off local users from these platforms.
The government accused these exchanges of contributing to the depreciation of the Naira through speculative trading and unlicensed operations. Binance, in particular, has found itself at the center of this regulatory storm, with two of its executives detained in Nigeria, one of whom has been held for over six months. Despite the detention and ongoing negotiations, the dispute between the Nigerian government and Binance remains unresolved, and users in the country continue to face restrictions when accessing crypto platforms.
The SEC’s latest enforcement announcements indicate that the regulatory battle is far from over. Dr. Agama’s statement confirms the SEC’s intent to continue targeting unlicensed exchanges, ensuring that only those meeting strict regulatory standards are allowed to operate within Nigeria. This means more scrutiny and pressure on the crypto industry, which has already seen some service providers exit the Nigerian market.
What’s Next for Crypto in Nigeria?
The SEC’s aggressive stance on regulation could reshape Nigeria’s crypto landscape. With more young Nigerians turning to digital assets as an investment opportunity, the SEC is determined to strike a balance between innovation and regulation. By approving a select number of exchanges and strictly monitoring their activities, the SEC aims to create a safe and regulated environment for investors.
As the crypto market continues to evolve in Nigeria, it remains to be seen how exchanges will adapt to the new regulatory environment. Some may choose to comply with the SEC’s guidelines, while others could follow in the footsteps of those that have already exited the market.
In the meantime, the SEC’s focus on transparency, investor education, and strict enforcement measures will likely help legitimize the industry. However, the ongoing tension between regulators and crypto companies underscores the challenges of integrating decentralized financial systems into traditional economies. As Nigeria positions itself as a key player in Africa’s crypto landscape, its approach to regulation could serve as a blueprint for other countries looking to balance innovation with investor protection.
For now, the message from Nigeria’s SEC is clear: play by the rules, or face the consequences.
