Nigerian SEC’s New Policy Seems Challenging For Local Exchanges
In recent crypto news, a crypto analyst in Nigeria has pointed out that the new policies announced by the Nigerian Securities and Exchange Commission may prove challenging for local exchanges in the region to comply with, claiming that the new rules favor foreign exchanges. He added that the ban initially placed on crypto firms by the Central Bank of Nigeria had hindered institutional investment in the industry in the region; however, the narrative might change with the recent ban lifted.
According to the report, Nigerian analyst Rume Ophi expressed his opinion on the current situation in the Nigerian crypto market concerning the new licensing requirements for crypto firms that the Nigerian SEC recently published. He pointed out that these requirements could potentially force many existing local crypto exchanges in the region out of business as it favors foreign exchanges instead.
Nigerian SEC Sets New Crypto Rules
The Nigerian SEC reportedly published a 54-page document in May 2022, which contains a new set of rules to guide the issuance, offering, and custody of cryptocurrency in the country. The regulations were created to provide guidelines and clarity for digital assets services and product providers in the region. It also has information on how traditional banks and financial institutions are expected to interact with the evolving crypto industry.
According to the report, the new rule emphasizes the need for every crypto service provider in the country to get a VASP (Virtual Asset Provider) license from the commission. However, obtaining this license requires following a specific procedure, which includes submitting an application, paying a registration fee, and other related fees.
Each crypto firm applying for a VASP license is required to pay a whopping ₦500 million ($556,620) as a registration fee. Pointing out his main concern, Rume Ophi claimed that the steep capital requirement is too harsh on the local crypto community in the region.
New Rules Can Force Local Exchanges Out of Business
According to Rume Ophi, the exorbitant fee can cause a major financial burden for local exchanges operating in Nigeria, possibly compelling them to exit the market. Consequently, the analyst added that the crisis might escalate to a situation where foreign exchanges would predominate the country’s crypto economy since they can afford the capital to operate in Nigeria, unlike their local counterparts. He highlighted that such an occurrence can destabilize the local crypto ecosystem, which is consequential for both investors and firms.
Meanwhile, reports revealed that Nigeria is recognized as one of the countries with high rates of cryptocurrency adoption and awareness globally, as evident in recent research that involved 15 different countries where Nigeria emerged on top levels as one of the most crypto-aware nations worldwide. It is noteworthy that despite having the largest economy on the continent, it has a good and impressive crypto adoption rate.
CBN Lifts Crypto Ban in Nigeria
Nonetheless, Ophi highlighted that the ban that the Central Bank of Nigeria (CBN) initially placed on traditional financial firms, preventing them from offering services to crypto-related firms, had impeded foreign investors from exploring the Nigeria crypto market, consequently disrupting the flow of money in the cryptocurrency market.
However, the crypto community in Nigeria reportedly beamed with joy as the CBN of the country recently announced the lifting of the ban, meaning traditional financial institutions in the country can now support crypto firms and offer them banking services. The analyst suggested that the new development would facilitate foreign digital assets investment in the country’s market.
In addition, the move would encourage the hiring of local talent in the rapidly evolving ecosystems of Web3 and cryptocurrency at large. Evidently, crypto continues to gain mainstream acceptance across the world as it becomes a core point for invention and employment creation. Moreover, the recent ban lift is deemed as a pivotal step in the right way as it conforms with the global call for crypto innovation adoption.
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