Nigeria’s Securities and Exchange Commission (SEC) has announced plans to fast-track the approval of cryptocurrency licenses in 2025, aiming to strengthen oversight of the country’s expanding digital asset market while enhancing consumer protection.
This decision follows the introduction of the Accelerated Regulatory Incubation Programme (ARIP) in June 2024, which has already granted provisional licenses to Nigerian crypto platforms Quidax and Busha.
The ARIP enforces strict compliance with regulations, including local incorporation, having a resident CEO, and completing a two-phase application process. It also covers financial and operational controls, reporting obligations, and limits on customer base growth for both domestic and international VASPs targeting Nigerian investors.
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SEC Director-General, Emomotimi Agama, during an interview with Bloomberg, stressed that since cryptocurrency cannot be ignored in the country, there is a need for legislation to govern such transactions. He reiterated the plan to regulate them in a manner that does not hinder the country’s economic development.
Following the reversal of the ban on crypto platforms, to the issuing of licenses, the CEO OF Yellow Card, a pan-African digital assets exchange, Chris Maurice, stated that traditional banks in Africa are now showing interest in cryptocurrency as optimism for regulation heightens across the continent.
“We are having conversations with banks and other major financial institutions that a couple of months ago, they didn’t want to hear about crypto, they didn’t want to talk about it. Now these guys are calling us, they’re interested. They want to understand how they get into the space. I think obviously part of it is the Trump effect”, he said.
Maurice further expressed optimism that more African governments would soon come up with crypto regulation on the back of the recent global shift and the changes coming from the U.S.
With Nigeria ranking first globally in stablecoin usage and second in overall crypto, adoption, clearer regulations are expected to further boost market growth. Nigeria’s cryptocurrency market is projected to reach $52.5 million by 2028, reflecting a 12.66% increase between 2024 and 2028. The country remains one of the most active cryptocurrency markets worldwide, with individuals and businesses leveraging digital assets to hedge against inflation and foreign exchange volatility. However, the lack of clear regulations has left many investors uncertain about risks.
Nigeria’s Evolving Crypto Regulations
The SEC first introduced a framework for digital assets in September 2020, refining it further in 2022 to clarify the classification of cryptocurrencies under securities laws. In March 2024, new guidelines required all virtual asset service providers to register with the SEC.
The launch of ARIP in June 2024 marked a major policy shift, allowing crypto startups to secure provisional licenses while regulators assess their compliance and consumer protection measures. This represents a departure from Nigeria’s previous anti-crypto stance, which saw banks prohibited from working with crypto companies until the ban was lifted in December 2023.
Despite this progress, banks remain cautious about openly partnering with crypto businesses. Many financial institutions provide services to crypto startups under the guise of working with “investment companies,” avoiding direct recognition of their involvement with digital assets.
Factors Driving Adoption
Several key factors have driven the rapid adoption of cryptocurrencies in Nigeria. These include;
•Devaluation of the Naira: Nigeria’s local currency has faced severe depreciation, making crypto a more attractive option for storing value.
• Access to Global Markets: Cryptocurrencies allow Nigerians to participate in international commerce and investment, bypassing traditional banking barriers.
•Technological Advancements: With mobile phone penetration and internet access increasing, cryptocurrencies have become more accessible.
Overall, the SEC’s plan to accelerate cryptocurrency licensing in 2025 is a positive development for the Nigerian cryptocurrency industry. It promises to bring greater clarity, legitimacy, and potential economic benefits.