Nigerian crypto analyst, Rume Ophi, has urged the Nigerian Securities and Exchange Commission (SEC) to reconsider its crypto licensing requirements, specifically the guidelines for virtual asset services providers (VASPs).
Ophi expressed his concerns in an interview with Cointelegraph, stating that the existing guidelines do not favor local crypto exchanges, and he believes that these exchanges should have been a priority when formulating the regulations.
According to the SEC’s current guidelines, all exchanges must obtain a VASP license by complying with the specified application processing requirements and paying the necessary registration and applicable fees.
However, Ophi pointed out that many local exchanges struggle to meet the minimum upfront capital requirement of 500 million naira ($556,620).
This financial burden could lead to a situation where primarily foreign exchanges dominate the Nigerian crypto market, instead of achieving a more balanced ecosystem.
Supporting Ophi’s perspective, Kue Barinor Paul, a Nigerian Web3 legal representative, emphasized during a discussion hosted by Ophi that Nigerian crypto exchanges and VASPs might need to consider merging to pool resources and meet the SEC’s license requirements.
Paul stressed the need for the Nigerian SEC to revise its licensing framework, as the current regulations seem to favor foreign exchanges over local ones.
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In May 2022, the Nigerian SEC released a 54-page document titled “New Rules on Issuance, Offering Platforms, and Custody of Digital Assets,” which aimed to create a framework for cryptocurrency service providers in Nigeria.
This document also outlined guidelines for how the country’s banking and financial institutions could engage with digital assets.
Ophi further highlighted the importance of the Nigerian National Assembly’s involvement in aligning the SEC’s licensing requirements with the current economic realities of the country.
Nigeria, being the largest economy in Africa, has shown significant awareness of cryptocurrencies, ranking second in crypto adoption worldwide, according to Chainalysis’ “2023 Cryptocurrency Geography Report.”
Despite this potential, the country has faced challenges in attracting foreign crypto investment, which Ophi attributes to the recent removal of the ban on financial institutions serving crypto exchanges.
Revising the licensing requirements may help unlock the full potential of the Nigerian crypto market and attract more investment.
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