Nigeria gives VASPs 30-day ultimatum to comply with new rules

Nigerian regulators require digital asset service providers (VASPs) to update their applications within 30 days to comply with new regulations relating to digital asset issuance, bidding platforms, trading and custody.

Nigeria Updates Cryptocurrency Regulations

The Nigerian Securities and Exchange Commission (SEC) has officially announced plans to update crucial regulations on digital assets I notify to the public. The changes aim to strengthen the regulatory framework, ensuring it is more comprehensive and adaptable to the complexities of digital asset markets.

As part of this regulatory update, the SEC introduced the Accelerated Regulatory Incubation Program (ARIP). This is a specialized compliance initiative tailored for Virtual Asset Service Providers (VASPs).

The program offers VASPs a structured path to align with the country’s new regulatory standards.

According to information published by the SEC websiteA dedicated onboarding window has been established to facilitate VASP participation in ARIP.

Additionally, the SEC said it will take enforcement action against any operating VASP that fails to comply with the guidelines outlined in its Circular.

This regulatory update is part of Nigeria’s broader initiatives to improve oversight of its rapidly expanding cryptocurrency market.

Following the appointment of Emomotimi Agama as the new director general of the SEC, a noteworthy proposal is that of increase the registration fee for cryptocurrency exchanges ranges from 30 million naira ($18,620) to 150 million naira ($93,000).

Along with these SEC changes, the Central Bank of Nigeria (CBN) has issued guidelines governing banking relationships and account operations for virtual asset service providers (VASPs) in the country.

This coordinated effort highlights Nigeria’s commitment to regulating the virtual asset ecosystem responsibly rather than imposing blanket bans.

From prohibition to taxation

Since 2021, Nigeria’s approach to cryptocurrencies has changed significantly. The central bank initially banned banks from facilitating cryptocurrency transactions due to concerns about money laundering and terrorist financing.

Despite this ban, cryptocurrency adoption continued to grow, pushing the government to move towards fiscal policy. Here’s a timeline:

• February 5, 2021: The Central Bank of Nigeria (CBN) has issued a circular calling on banks, non-bank financial institutions and other financial institutions to Neighbor accounts associated with cryptocurrency transactions within their systems.
• February 9, 2021: The CBN launched a investigation in financial institutions that provide services to cryptocurrency traders.
• February 11, 2021: The Senate convened the CBN and the SEC to discuss the potential impact of cryptocurrencies on Nigeria’s economy and security.
• February 18, 2021: The International Monetary Fund (IMF) supported the CBN’s position, highlighting concerns that cryptocurrencies could facilitate illicit activities. On February 22, 2021, the SEC underlined the need to regulate cryptocurrencies.
• February 26, 2021: The CBN clarified his position, stating that while individuals were not prohibited from purchasing and trading cryptocurrencies, they could not do so through Nigerian banks or fintech platforms.
• April 7, 2022: The SEC formally recognized digital assets as securities and issued comprehensive regulations governing the trading and custody of cryptocurrencies in Nigeria.
• April 15, 2021: Discussions between SEC and CBN with regard to Regulation of cryptocurrencies has continued, as confirmed by the SEC.
• April 26, 2021: The Economic and Financial Crimes Commission (EFCC) has warned Nigerians about the risks of investing in Bitcoin (Bitcoin).
• July 22, 2021: The CBN announced its intention to do so launch the “eNaira”, a central bank digital currency (CBDC), distinct from Bitcoin and other cryptocurrencies.
• October 25, 2021: Nigeria has become the first African nation to introduce its own digital currency, “eNaira”.
• December 2, 2022: Zainab Ahmed, Minister of Finance, Budget and National Planning, announced provisions in the latest finance bill to impose taxes on cryptocurrencies and other digital assets.
• May 28, 2023: Former President Muhammadu Buhari signed the Finance Bill 2023 into law, which establishes a 10% tax on profits arising from the disposal of digital assets.

Despite regulatory challenges, Nigeria continues to stand out as a global leader in cryptocurrency adoption. The volume of crypto transactions in the country increased by 9% year-on-year to reach $56.7 billion between July 2022 and June 2023.

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