In a bid to strengthen compliance and investor protection within the digital asset sector, Nigeria’s Securities and Exchange Commission (SEC) has introduced stringent new regulations for Virtual Asset Service Providers (VASPs), including cryptocurrency firms. Announced on June 21, 2024, the SEC now requires all VASPs to establish a physical presence in Nigeria under its Accelerated Regulatory Incubation Programme (ARIP).
Key Compliance Requirements
The new mandate compels both current and prospective VASPs, including crypto brokers and dealers, to complete their application process on the SEC ePortal within 30 days. ARIP is designed to expedite the registration and onboarding process for companies that have already applied, as well as new entrants seeking to operate in Nigeria’s digital asset market.
To qualify for ARIP, applicants must:
– Be incorporated in Nigeria.
– Maintain an office within the country.
– Ensure that their CEO or equivalent executive resides in Nigeria.
– Be active in the investments and securities business.
– Have plans to register or have already filed virtual asset-related applications with the SEC.
– Submit an affidavit confirming no fraud convictions.
– Pay a ₦2 million processing fee.
Post-Approval Obligations
Once approved under ARIP, participants must adhere to ongoing compliance requirements, including:
– Regular submission of trading statistics, financial statements, and compliance reports.
– Periodic inspections and audits by the SEC.
Penalties for Non-Compliance
The SEC has outlined substantial penalties for non-compliance. Companies failing to meet the new requirements will face fines of at least ₦5 million for the first violation and ₦200,000 for each additional day of non-compliance. Operating without SEC approval will result in a ₦20 million fine and potential suspension from the capital market.
Impact on the Digital Asset Market
Economy watchers say this development implies a regulatory shift which underscores SEC’s commitment to fostering a transparent and secure environment for digital asset transactions. SEC’s aims to enhance oversight and ensure investor protection in Nigeria’s rapidly evolving digital asset landscape indeed necessitates the commission mandating a local presence and stringent compliance measures.
And as the 30-day deadline approaches, VASPs are urged to swiftly align with the new regulations to avoid punitive measures and secure their operations within Nigeria. The ARIP initiative represents a significant step towards comprehensive regulation of the digital asset sector, promising a more robust and reliable market for investors and businesses alike.
