Nigerian Analysts Call for SEC Reforms to Support Crypto Exchanges

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Some Nigerian crypto analysts are calling for a thorough review of the existing guidelines set forth by the Nigerian Securities and Exchange Commission (SEC) concerning local crypto exchanges.

The call was necessitated by several regulatory factors that they consider to be restrictive to local crypto exchanges.

Only last month, the Central Bank of Nigeria (CBN) relaxed rules for financial institutions that support Bitcoin transactions in recognition of the changing importance of digital currencies in the nation’s financial space.  It marked a break from its earlier restrictive measures.

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Inadequacies of Current SEC Guidelines

The analysts argue that the current framework lacks provisions that adequately support indigenous crypto exchanges, ultimately hindering their ability to obtain licenses for operation within the country.

One of them, a prominent figure in the Nigerian crypto landscape, Rume Ophi, highlights specific deficiencies within the current guidelines, such as the imposing upfront capital requirement of 500 million naira ($556,620), which proves to be prohibitive for many local exchanges.

Challenges Faced by Local Nigerian Crypto Exchanges

The challenges faced by local crypto exchanges in Nigeria are multifaceted and require a subtle approach from regulatory authorities.

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A Nigerian Web3 legal representative, Kue Barinor Paul, suggests that the stringent licensing requirements set by the SEC might necessitate Nigerian crypto exchanges and VASPs to explore consolidation as a means to meet these criteria.

The Nigerian Securities and Exchange Commission released a 54-page paper titled “New Rules on Issuance, Offering Platforms and Custody of Digital Assets” in May 2022.

In addition to providing instructions on how Nigeria’s banks and financial institutions can deal with digital assets, the paper opens doors for bitcoin service providers operating in the nation.

However, this approach poses its own set of challenges and underscores the urgent need for the SEC to reassess its regulatory framework to create a more conducive environment for local exchanges to thrive.

Advocating for Regulatory Reform

The push for regulatory reform within the Nigerian crypto landscape extends beyond mere adjustments to licensing requirements.

It encompasses a broader advocacy effort aimed at aligning regulatory frameworks with the country’s economic realities while fostering an inclusive ecosystem that supports the growth of local exchanges.

Key stakeholders, including the National Assembly of Nigeria have been called upon to play a pivotal role in ensuring that regulatory policies are conducive to the development of the local crypto industry.

Despite Nigeria’s notable level of cryptocurrency awareness and adoption, regulatory challenges persist, impeding the country’s ability to fully harness the potential of its crypto market and attract foreign investment.

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