The Securities Exchange Commission (SEC) of Nigeria has introduced stringent licensing requirements that could reshape the industry. Despite the Central Bank of Nigeria (CBN) recently lifting a ban on banks’ engagement with cryptocurrencies, local crypto exchanges are facing a new hurdle: the SEC’s steep capital requirements.
Crypto expert Rume Ophi has voiced concerns that the SEC’s mandate for a minimum paid-up capital of approximately $556,620 (N500 million naira) may price out local players. This could potentially skew the market in favor of international exchanges and disrupt the local crypto ecosystem’s growth.
The SEC’s 54-page guideline released in May 2022, titled “New Rules on Issuance, Offering Platforms and Custody of Digital Assets,” was intended to create a regulatory framework for digital assets, including the need for a virtual asset service provider (VASP) license. However, the high entry barrier could stifle the number of local exchanges, contrary to the expected boost in foreign crypto investment and local employment in the Web3 and crypto sectors.
Nigeria has been recognized as a global leader in crypto awareness, with significant adoption rates. The recent CBN ban lift was anticipated to further attract foreign investment and bolster local job creation. However, the stringent SEC requirements may now present an unforeseen obstacle, potentially hindering the progress of Nigeria’s crypto industry.
