SEC mandates all VASPs, crypto firms to establish office in Nigeria

Nigeria’s Securities and Exchange Commission(SEC) has mandated all Virtual Assets Providers (VASP) as well as crypto firms to establish an office in the country under its Accelerated Regulatory Incubation Programme (ARIP).

In a circular dated June 21, 2024, tagged “Framework On Accelerated Regulatory Incubation Program (ARIP) For The Onboarding Of Virtual Assets Service Providers (VASPs)”, SEC directed all operating and prospective VASPs (including crypto brokers/dealers) to visit the SEC ePortal to complete the application process no later than 30 days from the date of the Circular.

SEC states that while the rules on Digital Assets Issuance, Offering Platforms, Exchange and Custody are going through an amendment process, virtual assets service providers must come under the ARIP for now.

The circular reads in part, “The Commission may require ARIP participants to furnish it, at such time and in such manner as it may direct, with such information as the Commission may reasonably require for the proper discharge of its functions under this framework.

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“ARIP participants shall make its premises, systems, books and records readily available to the Commission, or its officers or any person appointed by the Commission for inspection, audit and other supervisory purposes, ” the framework stated.

“ARIP participants who fail to comply with any of the stipulated requirements shall be liable to a penalty of not less than N5,000,000 (Five Million Naira, only) at the first instance and further N200,000 (Two Hundred Thousand Naira, only) for every day of default. Other administrative sanctions as provided for in the Commission’s Rules and Regulations may also apply depending on the severity of the violation(s).

“A penalty of not less than N20,000,000 (Twenty Million Naira, only) shall immediately apply to all commercialized VASPs operating trading, offering and custody platforms without due authorization or registration by the Commission.

“A penalty of not less than N10,000,000 (Ten Million Naira, only) shall immediately apply to all other digital investments platforms including crypto brokers/dealers, advisers, market makers etc. operating without due authorization or registration by the Commission.

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“Appropriate sanctions including suspension from capital market activities shall apply to entities who fail to comply with the Rules and regulations of the Commission”.

The tightening of digital regulatory frameworks comes after a director at  SEC, Abdulkadir Abbas, had told the Federal High Court, Abuja, that an unregistered cryptocurrency exchange platform, Binance  Limited, used its Naira peer-to-peer (P2P) virtual feature to devalue the Nigerian currency.

By this special window, a platform like Binance may be ineligible to be registered in Nigeria following the conviction of its founder in the US and fines imposed on the platforms in other jurisdictions.

SEC had said the ongoing digitization moves will play a crucial role in setting a new standard for capital raising in Nigeria and enable the capital market to support the achievement of the US$1 trillion economy target of the current administration.