Binance Under Scrutiny: Nigeria’s SEC Demands Crypto Exchanges Re-register Within 30 Days

• Nigeria’s SEC mandates cryptocurrency exchanges and digital asset traders to re-register their businesses within a month.
• This directive is part of a broader initiative to tighten regulations around digital assets trading in Nigeria.
• “All operating and prospective VASPs are hereby directed to visit the SEC ePortal to complete the application process no later than 30 days from the date of this circular,” the SEC announced.

In-depth analysis on Nigeria’s latest regulatory measures for cryptocurrency exchanges and digital assets traders.

Nigeria’s SEC Imposes 30-Day Re-Registration Deadline for Crypto Exchanges

The Nigerian Securities and Exchange Commission (SEC) has issued a pivotal directive, granting cryptocurrency exchanges and digital asset traders a 30-day period to re-register their businesses or face stringent enforcement actions. This move is a significant part of Nigeria’s strategy to bring digital assets trading under closer regulatory scrutiny, aiming to amend the existing rules concerning digital assets offerings, exchanges, and custodian requirements for virtual asset service providers (VASPs).

A Thriving Yet Contested Cryptocurrency Market

Despite regulatory challenges, Nigeria’s cryptocurrency market has experienced significant growth. In 2022, the country ranked 11th on the Global Crypto Adoption Index, underscoring the increasing adoption of digital currencies even amid regulatory pressures. By 2023, Nigeria had ascended to the second position, demonstrating the resilience and growth of its crypto sector despite an ongoing ban by the Central Bank of Nigeria (CBN) that prohibited banks from facilitating crypto trading.

SEC’s Skepticism and Strategic Shifts

The SEC has historically expressed caution regarding digital assets. In a June 2023 circular, the Commission highlighted the risks associated with cryptocurrencies, labeling them as “extremely risky” and warning investors of potential total losses. The regulatory body’s apprehensions were further amplified earlier this year when Nigerian authorities accused major exchanges like Binance of being involved in money laundering and affecting foreign exchange rates.

Regulatory Warnings and Innovations

Recently, the SEC advised against investments in certain digital assets, such as the meme coin promoted by Nigerian Afrobeats star Davido, due to concerns over stability and security. However, the Commission is not entirely dismissive of blockchain innovations. In a strategic pivot, the SEC has revealed plans to pilot a program focused on the tokenization of assets. This initiative includes creating a permissioned liquidity pool featuring tokenized bonds and deposits, aligned with the current realities of the financial ecosystem.

Conclusion

Nigeria’s push for stricter regulations in the cryptocurrency sector aims to safeguard investors and ensure the market’s integrity. While these new measures might pose short-term challenges for digital asset service providers, they are crucial for fostering a more secure and transparent trading environment. As Nigeria navigates this evolving landscape, the outcomes of these regulatory efforts will be closely watched by global observers and stakeholders within the crypto community.