Nigeria’s Securities and Exchange Commission (SEC), has proposed licensing fees and capital requirements that industry stakeholders have dismissed as “economically unrealistic”, and which they say can only have one end; extinguishing local trade in the asset space.
The proposed rules by the SEC require a minimum paid-up capital of 500 million naira ($ 1.1 million) as well as 25% of this amount under fidelity insurance bond for digital asset exchanges.
The requirements are considered to be on the higher side of the local players by the analysts such as Rume Ophi and Kue Barinor Paul such that they could leave the market by either merging with other companies or simply leaving the market. They caution, however, that this would in turn leave the industry vulnerable to bigger, global competitors who have money for the prices.
Exactly the same fears came up on the soil of South Africa where fees for licensing were high and as a result many VASP applicants withdrew their requests. On the contrary, some Asian countries such as India developed policies to advocate for local trades which have seen the activity spike.
Faced with the establishment of Nigeria’s VASP market to spur the growth during the wake of the recent banking ban lifted by the central bank, the commission’s proposed charges could have a cataclysmic trajectory on the industry’s topography.
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