The Nigerian Securities and Exchange Commission (SEC) has announced plans to issue licenses to cryptocurrency exchanges operating in the country.
The move is part of a broader strategy to foster the growth of the digital assets market, particularly among Nigeria’s tech-savvy youth.
In an interview with Bloomberg, SEC Chief Emomotimi Agama said it is important to embrace the rapidly expanding cryptocurrency sector, which has gained immense popularity among young Nigerians.
According to Agama, the decision to license crypto exchanges is intended to support innovation in fintech while ensuring transparency and security within the industry.
“Being a crypto enthusiast and fintech enthusiast, I can tell you without a doubt that this is going to happen sooner than you think,” Agama said. “We must support the youths of this country to be able to achieve the benefits accruable in fintech. The market size is huge, and it is growing.”
This announcement comes on the heels of the SEC’s launch of a new initiative in June 2024 aimed at expediting the registration process for Virtual Assets Service Providers (VASPs).
The initiative also includes amendments to existing rules on digital asset issuance, offering platforms, exchanges, and custody.
Nigeria has rapidly become one of the world’s leading crypto economies, with a high demand for digital assets.
In fact, the country was named the second-largest economy in terms of cryptocurrency adoption last year and the most “crypto-crazy” country in August 2022, based on the volume of Google searches related to crypto.
The Nigerian SEC’s new licensing program represents a 180-degree shift from previous government policies, which had been largely hostile to cryptocurrencies.
For two years, the Central Bank of Nigeria (CBN) imposed restrictions on banks facilitating cryptocurrency transactions, citing concerns over money laundering and market manipulation.
However, as the demand for crypto assets surged, the CBN eventually lifted the ban, acknowledging the sector’s massive potential for economic growth.
Agama reiterated that the SEC’s approach to cryptocurrency regulation aims to foster transparency and protect investors while weeding out bad actors from the market.
“The SEC wants to provide a platform where people can formally do these things, and we are able to get all of the information that we need,” he said. “What we will not encourage is the use of cryptocurrency to manipulate our currency.”
Despite Nigeria’s impressive rise in the crypto space, the industry still faces challenges. Earlier this year, several top crypto exchanges, including Binance and OKX, suspended Naira-based peer-to-peer trading due to allegations of currency manipulation and money laundering.
The ongoing regulatory spat between Nigerian authorities and Binance, one of the world’s largest crypto exchanges, has further complicated the landscape. Nigerian authorities have detained a Binance executive, Tigran Gambaryan, over accusations of money laundering and tax evasion.
Despite these setbacks, the SEC’s new licensing program is expected to reignite confidence in Nigeria’s crypto market. By establishing clear regulatory frameworks for digital asset exchanges, the SEC hopes to provide greater security for investors and foster innovation in Nigeria’s burgeoning fintech sector.
The Nigerian fintech industry has been a driving force behind the country’s economic growth, with young Nigerians at the forefront of technological innovation.
The SEC’s decision to issue crypto exchange licenses reflects its commitment to supporting these young entrepreneurs, ensuring that they have the regulatory support needed to thrive in the global digital economy.
