The Nigerian Securities and Exchange Commission (SEC) has revealed that 50 cryptocurrency exchanges are currently seeking operational licenses, following the government’s recent shift in its stance on digital assets. This announcement marks a significant development in Nigeria’s crypto landscape, with both local and international operators jostling for a piece of the burgeoning market.
Emonotimi Agama, Director-General of the SEC, made the disclosure during a fireside chat at the BusinessDay Blockchain Conference held in Lagos on Wednesday. In August, the SEC had granted approval in principle to two Digital Asset Exchanges, while five other firms were admitted to its Regulatory Incubation Program (RI). These developments signal the country’s growing acceptance of blockchain technology, particularly among the youth.
Regulatory Framework Opens New Doors
The SEC’s Accelerated Regulatory Incubation Program (ARIP) was introduced to onboard firms that had begun operations before the release of the Rules on Virtual Asset Service Providers in May 2022. This program allows businesses to test their services and technology under close regulatory supervision. The RI Program, meanwhile, is designed to assess the business models of digital asset firms, providing a safe environment for testing products and services in a real-world market setting.
Among the firms that have been approved or admitted into these programs are notable players such as Busha Digital Limited, Quidax Technologies Limited, Trovotech Ltd, Wrapped CBDC Ltd, Housingexchange.ng Ltd, Dream City Capital, and Blockvault Custodian Ltd.
The SEC has emphasized that additional license applications are under review, with approvals to be granted once firms meet regulatory requirements. “Our work at the SEC is to protect investors and foster market development,” Agama said during the event. He highlighted that innovation is welcome, but firms must comply with regulations to ensure the growth of a stable and sustainable digital economy.
Embracing Blockchain Technology
Agama further explained that Nigeria’s government is increasingly receptive to crypto and blockchain technologies, particularly given the high adoption rates among the country’s youth. While different sectors may embrace digital assets at varying speeds, he noted that widespread acceptance is inevitable.
“For innovators, we encourage you to seize the opportunity to develop blockchain solutions tailored to Africa’s unique needs. Focus on solving real-world problems, such as financial exclusion, inefficient supply chains, and lack of transparency in governance,” he added, urging companies to tap into the transformative potential of blockchain technology.
The Role of Regulation in Crypto’s Growth
Buchi Okoro, CEO of Quidax, a prominent Nigerian crypto exchange, emphasized the importance of regulation in safeguarding investors and fostering a secure trading environment. During a separate fireside chat, Okoro pointed out that while crypto-related fraud is often alarming, it pales in comparison to fraudulent activities carried out through traditional financial channels. “Criminals typically adopt new technology faster than everyone else,” Okoro remarked, adding that as the industry matures, much of this fraud will dissipate as legitimate players take center stage.
Francis Ogbuka, Vice President of Sales and Development at Zone, echoed similar sentiments, stating that the licensing of crypto exchanges would boost the sector’s growth. He predicted that many players would migrate their assets to regulated platforms that provide enhanced safety and oversight.
Nigeria’s Thriving Crypto Market
Nigeria is currently one of the largest peer-to-peer (P2P) crypto markets globally, with transactions totaling $56.7 billion between July 2022 and June 2023, according to blockchain analytics firm Chainalysis. Industry experts at the conference agreed that the introduction of regulatory frameworks will further strengthen the country’s digital asset ecosystem.
The SEC has been spearheading efforts to establish a regulatory structure for cryptocurrencies, particularly after the Central Bank of Nigeria (CBN) lifted its ban on digital assets in December 2023 and handed regulatory authority to the SEC. With this shift, Nigeria is poised to become a leader in the African crypto market, as regulatory clarity encourages innovation while ensuring investor protection.
