Introduction
The Nigeria Securities and Exchange Commission ("SEC") by a press release issued on August 29 2024, announced that it has granted two Digital Asset Exchanges its "Approval and Principle" under the Accelerated Regulatory Incubation Program ("ARIP"). The framework for ARIP was introduced by SEC in June 2024(see our previous newsletter https://pavestoneslegal.com/insights-into-the-sec-accelerated-regulatory-incubation-program-framework/ for details) for the purpose of onboarding virtual asset Exchange companies.
With this new update there is more clarity on the regulatory requirements for Companies wishing to provide crypto trading services in Nigeria. In view of the forgoing we have set out guidelines for companies wishing to provide crypto trading services in Nigeria.
- Are all Crypto Trading Companies Required to Register with SEC?
Yes, all digital exchanges and platforms wishing to provide crypto trading services in Nigeria are required registered under the ARIP and obtain the approval of SEC in other to provide such services in Nigeria.
- What Approval will be Issued by SEC to Qualified Companies
Upon undergoing registration under ARIP, an "Approval in Principle" will be granted to eligible companies. Once the condition for the Approval in Principle given by SEC has been satisfied by the company, the Company will then be given full registration by SEC.
- Is the Company required to be Incorporated Nigeria?
Yes, all companies wishing to provide crypto trading services must be registered with the Corporate Affairs Commission. The Certificate of Incorporation is one of the document that is required to be shown for registration under the ARIP.
- Registration Requirements
According to the rules set by the SEC, digital asset exchanges specifically are required to have a minimum paid-up capital of 500 million naira and must maintain a fidelity bond covering 25% of the paid-up capital of the company. Additionally, the CEO and principal officers of the company must possess relevant university degrees and at least five years of cognitive experience. Furthermore, digital asset exchanges must obtain a "No Objection" letter from the SEC before commencing its operations and trading any virtual or digital assets. Please see our previous newsletter for a more detailed list of requirement.
- Do these rules apply to Foreign Business wishing to operate Crypto Trading Companies in Nigeria?
Yes, this rules applies to foreign companies wishing to operate crypto trading companies in Nigeria including incorporating a company with the Corporate Affairs Commission (CAC) for the purpose of providing the services.
Conclusion
As the market for digital assets continues to grow, businesses interested in entering this space must ensure full compliance with the regulatory requirements set out by SEC and other relevant authorities.
We advise that you work closely with your legal advisors to ensure that you successfully operate within the confines of the relevant regulations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.