Nigeria issues 30day deadline for VASPs to adhere to new regulations

Nigeria Requires Virtual Asset Service Providers (VASPs) to Update their Applications within 30 Days to Comply with New Rules on Digital Asset Issuance, Offering Platforms, Exchange, and Custody
Nigeria has announced plans to update key digital asset regulations, according to the Nigerian Securities and Exchange Commission (SEC). The amendments are intended to enhance the regulatory framework and make it more comprehensive and adaptable to the complexities of digital asset markets.
As part of this regulatory update, the SEC has introduced the Accelerated Regulatory Incubation Programme (ARIP), a specialized compliance initiative tailored for virtual asset service providers (VASPs). The program offers VASPs a structured pathway to align with the country’s new regulatory standards.
The SEC has established a dedicated onboarding window to facilitate VASPs’ participation in the ARIP, as stated on the SEC’s website. Non-compliant VASPs will face enforcement actions, as outlined in the SEC’s Circular.
This regulatory update is part of Nigeria’s broader initiatives to enhance oversight of its rapidly expanding cryptocurrency market. Emomotimi Agama, the new SEC Director-General, has proposed raising the registration fee for crypto exchanges from 30 million naira ($18,620) to 150 million naira ($93,000).
In addition to the SEC changes, the Central Bank of Nigeria (CBN) has issued guidelines governing banking relationships and account operations for VASPs in the country. This coordinated effort demonstrates Nigeria’s commitment to responsibly regulating the virtual asset ecosystem rather than imposing blanket bans.
Nigeria’s approach to cryptocurrencies has evolved significantly since 2021. Initially, the central bank banned banks from facilitating cryptocurrency transactions due to concerns over money laundering and terrorism financing. However, the government has shifted towards a taxation policy in response to the increasing adoption of cryptocurrencies.
The timeline of Nigeria’s cryptocurrency policy shift is as follows:
– Feb. 5, 2021: The Central Bank of Nigeria (CBN) issued a circular directing financial entities to close accounts associated with cryptocurrency transactions.
– Feb. 9, 2021: The CBN launched an investigation into financial institutions providing services to cryptocurrency traders.
– Feb. 11, 2021: The Senate summoned the CBN and SEC to discuss the potential impacts of cryptocurrencies on Nigeria’s economy and security.
– Feb. 18, 2021: The International Monetary Fund (IMF) supported the CBN’s stance, highlighting concerns about cryptocurrencies facilitating illicit activities. The SEC emphasized the necessity of regulating cryptocurrencies on February 22, 2021.
– Feb. 26, 2021: The CBN clarified its position, stating that while individuals were not prohibited from buying 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 exchange and custody of cryptocurrencies within Nigeria.
– April 15, 2021: Discussions between the SEC and CBN regarding cryptocurrency regulation continued.
– April 26, 2021: The Economic and Financial Crimes Commission (EFCC) warned Nigerians about the risks of investing in Bitcoin (BTC).
– July 22, 2021: The CBN announced plans to launch the “eNaira,” a central bank digital currency (CBDC), distinct from Bitcoin and other cryptocurrencies.
– Oct. 25, 2021: Nigeria became the first African nation to introduce its digital currency, the “eNaira.”
– Dec. 2, 2022: Zainab Ahmed, the Minister of Finance, Budget, and National Planning, disclosed provisions in the latest finance bill to impose taxes on cryptocurrencies and other digital assets.
– May 28, 2023: Former President Muhammadu Buhari signed the 2023 finance bill into law, instituting a 10% tax on gains from the disposal of digital assets.
Despite regulatory challenges, Nigeria continues to lead in cryptocurrency adoption. The volume of crypto transactions in the country increased by 9% year-over-year to $56.7 billion between July 2022 and June 2023. U.S. lawmakers have also visited imprisoned Binance executive in Nigeria.