Nigerian SEC Mandates Local Presence for Crypto Companies

As a researcher with a background in financial regulation and experience in studying the cryptocurrency market in Africa, I find the new regulations set by the Nigeria Securities and Exchange Commission (SEC) for virtual asset service providers (VASPs) to be a necessary step towards ensuring investor protection and promoting accountability in the crypto industry.

The Nigeria Securities and Exchange Commission (SEC) has introduced new rules for virtual asset service providers (VASPs). According to these regulations, VASPs are required to establish a tangible presence in Nigeria as part of operating under SEC’s jurisdiction.

Per a recent declaration, Virtual Asset Service Providers (VASPs) are required to register as legal entities and establish local offices within Nigeria in order to join the Accelerated Regulatory Incubation Programme (ARIP). This initiative facilitates the integration of crypto businesses into Nigeria’s regulatory framework.

The SEC has introduced an extra rule: The CEO or managing director of these companies must physically be based in Nigeria. This is aimed at strengthening accountability and regulatory oversight over cryptocurrency transactions within Nigeria.

The Securities and Exchange Commission (SEC) has given existing and new Virtual Asset Service Providers (VASPs), which include crypto brokers and dealers, a 30-day window to submit their applications via the SEC ePortal. Once approved under the Alternative Trading System (ATS) Registration Issuers and Platforms (ARIP) framework, these entities will be granted provisional authorization to carry on their operations while the Digital Assets Rules are being formally adopted.

To apply, companies must provide affidavits, intricate business blueprints, and strategies emphasizing investor safety. A non-refundable application fee of 2 million naira ($1,277) is additionally needed for processing.

The SEC requires regular reporting from ARIP participants to maintain compliance. They need to submit weekly and monthly trading data, quarterly financial statements, and reports on any incidents when they occur.

The commission imposes substantial fines for non-adherence. Penalties for unregistered commercial Virtual Asset Service Providers (VASPs) start at a minimum of 20 million naira ($12,776), while other digital investment platforms risk paying penalties amounting to 10 million naira ($6,388) or higher.

All Virtual Asset Service Providers (VASPs) and token issuers operating in Nigeria or catering to Nigerian customers are subject to the new rules. This includes platforms handling the trading, exchange, safekeeping, and transfer of digital assets.

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2024-07-05 03:32