Nigerian SEC to License Crypto Platforms Amidst Growing Digital Currency Use

• Nigerian SEC to license virtual asset providers, aligning the country with global cryptocurrency regulations.
• Despite government crackdowns, Nigerian crypto transactions rose 9% to $56.7 billion in June 2023.
• The SEC aims to formalize the crypto market, enhancing transparency and curbing activities that could weaken the naira.

The Nigerian Securities and Exchange Commission (SEC) is set to begin licensing virtual asset providers, including cryptocurrency platforms. This move is part of the government’s strategy to regulate the rapidly expanding digital currency market in the country. The licensing is expected to promote transparency, ensure better oversight, and align Nigeria’s crypto market with global standards.

Significant Step Towards Global Regulatory Alignment

According to Bloomberg, the SEC’s decision will put Nigeria alongside other regions such as the European Union, South Africa, and Botswana, which have already begun regulating cryptocurrency providers. Emomotimi Agama, the Director-General of the SEC, announced that the first licenses for digital assets and tokenized assets will be issued this month. 

He emphasized that this initiative is crucial for guiding Nigeria’s youth in harnessing fintech innovations, as the market for such technologies continues to grow rapidly.

Despite previous government crackdowns on cryptocurrency transactions, including a ban on banks processing crypto-related activities, the Nigerian crypto market remains robust. In February, the government took measures against Binance, the world’s largest crypto exchange, citing concerns over its involvement in speculative activities that could destabilize the naira. The government also prosecuted Binance executives for allegedly facilitating illicit financial flows.

Nigerian Crypto Users Turn to Alternative Platforms

However, Nigerian traders have adapted by shifting to alternative platforms like Bitkoin Africa and Quidax. These platforms have seen significant growth, with transaction volumes rising by 9% to $56.7 billion in June 2023 compared to the previous year. Agama noted that this figure only represents a portion of the total market activity, as many transactions go unreported.

The SEC’s new licensing framework is designed to formalize the crypto market, aiming to curb the use of digital currencies in activities that could undermine the national currency. By providing a structured and regulated environment, the Nigerian government hopes to foster a more secure and transparent digital asset ecosystem.