Nigerian exchanges are discouraged by SEC crypto licensing requirements
Nigeria's Securities and Exchange Commission (SEC) crypto licensing requirements will significantly reduce the number of local crypto exchanges operating in the country, while the Central Bank of Nigeria (CBN) has lifted restrictions on Nigerian banks facilitating cryptocurrency transactions, according to Nigerian crypto analyst Rume. Office.
In an interview with Cointelegraph, Rume revealed that many local exchanges are unable to operate due to the minimum paid up capital of $556,620 (N500 million naira). He said that this requirement, instead of maintaining a healthy balance, mainly causes foreign exchange to work in Nigeria.
In May 2022, Nigeria's SEC published a 54-page document on its website titled “New Rules on Issuance, Distribution Platforms and Protection of Digital Assets”.
This document opens the doors to cryptocurrency service providers in Nigeria and details guidelines for the country's banking and financial institutions on how to deal with digital assets.
According to SEC regulations, exchanges must obtain a virtual asset service provider (VASP) license from the SEC by completing an application process, registration fee, and other applicable fees.
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According to an international survey involving respondents from 15 countries, Africa's largest economy, Nigeria, has the largest cryptocurrency-savvy population in the world. In Chainalysis' 2020 Cryptocurrency Geography report, Nigeria ranked eighth in terms of crypto adoption and usage rate among the 154 countries included in the study.
However, the country's crypto adoption rate is expected to encourage more foreign crypto investment, but the opposite is the case. Rume emphasized that the ban on financial institutions from providing services to crypto exchanges is responsible for the low investment rate.
Rume explained that the recent lifting of the CBN ban on Nigerian crypto will boost foreign investment and employment of indigenes in the web3 and crypto industry.
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