The Nigerian Securities Exchange Commission (SEC) has introduced crypto license requirements that are poised to reshape the landscape of the local cryptocurrency exchange market.
Despite the Central Bank of Nigeria (CBN) recently lifting restrictions on Nigerian banks facilitating cryptocurrency transactions, Rume Ophi, a Nigerian crypto analyst, believes that the SEC’s new regulations will have a significant impact.
In an interview with Cointelegraph, Rume pointed out a crucial issue: the minimum paid-up capital requirement of $556,620 (N500 million naira).
This substantial financial burden is a barrier that many local cryptocurrency exchanges may find insurmountable.
Consequently, Rume predicts that these stringent requirements will likely result in a reduced number of operational local exchanges, tilting the balance towards foreign exchanges dominating the Nigerian market.
The Nigerian SEC’s move to reshape the crypto landscape began in May 2022 when it published a comprehensive 54-page document titled “New Rules on Issuance, Offering Platforms, and Custody of Digital Assets.”
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This document aimed to provide guidelines for cryptocurrency service providers in Nigeria and outline how banking and financial institutions in the country could engage with digital assets.
To comply with the SEC’s regulations, cryptocurrency exchanges must obtain a virtual asset service provider (VASP) license, which involves meeting various requirements, including application processing, registration fees, and other associated costs.
Remarkably, a global survey spanning 15 countries revealed that Nigeria, Africa’s largest economy, boasts the highest level of cryptocurrency awareness in the world.
Despite this, Nigeria’s cryptocurrency adoption and usage rate ranked only eighth among 154 countries surveyed in Chainalysis’ 2020 Cryptocurrency Geography Report.
Rume suggests that the ban on financial institutions servicing crypto exchanges played a pivotal role in constraining investment in the country.
However, with the recent lifting of the CBN ban, Rume believes that Nigeria is poised for a positive shift in crypto investment.
This policy change is expected to encourage more foreign crypto investment, potentially revitalizing the Nigerian cryptocurrency industry.
Additionally, it could pave the way for the employment of locals in Web3 and the broader crypto sector, contributing to the growth and development of Nigeria’s digital economy.
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