Nigeria's Securities and Exchange Commission (SEC) cryptocurrency licensing requirements should revise virtual asset service provider (VASP) guidelines to allow local cryptocurrency exchanges to obtain licenses to operate in the country, according to Nigerian cryptocurrency analyst Rume Ofie.
In an interview with Cointelegraph, Ofie explained that the current SEC guidelines for registering VASPs do not benefit local cryptocurrency exchanges. He said local exchanges should be a priority when developing guidelines.
Exchanges must obtain a VASP license from the SEC, subject to requirements for processing applications, paying registration fees and other applicable fees.
— Thecryptopreacher. (@Rumerule) January 26, 2024
Ofi explained that many local exchanges cannot afford the minimum upfront capital of US$556,620 (500 million naira), which he said would result in Nigeria having mostly foreign exchanges rather than having a healthy balance.
Supporting Ophi's view on the matter, Kue Barinor Paul, the Nigerian legal representative of Web3, said during a talk at X-Spaces hosted by Rume Ophi that Nigerian cryptocurrency exchanges and VASPs will likely have to resort to a merger to meet SEC licensing requirements .
Paul said Nigeria's SEC needs to overhaul its license registration system as the current requirements are largely friendly to foreign exchanges.
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In May 2022, the Nigerian Securities and Exchange Commission published a 54-page document entitled “New Rules for the Issuance, Offering of Platforms and Custody of Digital Assets.” The document opens the door for cryptocurrency service providers in Nigeria and details how the country's banking and financial institutions can interact with digital assets.
Ofie further noted that the National Assembly of Nigeria must get involved to ensure that the SEC's licensing requirements are in line with the current realities of the country's economy.
A global survey involving participants from 15 countries found that Nigeria, Africa's largest economy, boasts the highest level of awareness of cryptocurrencies in the world. According to Chaina analysis' “Cryptocurrency Geography Report 2023”, Nigeria ranked second in cryptocurrency adoption out of 154 countries assessed.
The expected widespread adoption of cryptocurrency in the country was expected to attract increased foreign investment in cryptocurrency. However, Ophi attributes the low level of investment to the recent lifting of the ban on financial institutions servicing cryptocurrency exchanges.