Nigeria’s Securities and Exchange Commission (SEC) has implemented a new requirement for virtual asset service providers (VASPs) that mandates the establishment of an office in Nigeria in order to be eligible for its framework program.
According to a post on the SEC’s website, entities must be incorporated and have a physical office in Nigeria in order to qualify for the Accelerated Regulatory Incubation Programme (ARIP), which aims to onboard VASPs within the country. Moreover, the CEO or managing director of these entities must reside in Nigeria. Applicants must be engaged in investment and securities business and either seek registration or have pending applications related to virtual assets with the SEC.
In a circular issued on June 21, the SEC instructed all existing and potential VASPs, including crypto brokers and dealers, to complete their applications through the SEC ePortal within a 30-day timeframe. While the regulations regarding digital assets issuance, offering platforms, exchange, and custody are being amended, VASPs are required to operate under the ARIP temporarily.
The SEC explains that the purpose of the ARIP is to expedite the onboarding process for entities seeking SEC registration. It offers a provisional approval until the Digital Assets Rules are fully implemented. This framework is applicable to virtual asset service providers and token issuers conducting business in Nigeria or providing services to Nigerian consumers, including platforms that facilitate the offering, trading, exchange, custody, and transfer of digital assets.
The application requirements include a sworn statement confirming the absence of fraud or dishonesty convictions, an operational plan, a business model with a clear value proposition, and provisions for investor protection. Additionally, applicants must pay a processing fee of 2 million naira ($1,277) and provide evidence of the required shareholder funds. ARIP participants are expected to submit weekly and monthly trading statistics, quarterly financial reports, compliance reports, and incident reports.
The SEC warns that failure to comply with the ARIP requirements could lead to penalties starting at 5 million naira ($3,194) and increasing by 200,000 naira ($127.76) per day for continued noncompliance. Unregistered commercial VASPs may face penalties of at least 20 million naira ($12,776), while other digital investment platforms, such as crypto brokers and advisers, may be fined at least 10 million naira ($6,388).
In March, the SEC of Nigeria proposed an amendment to the rules governing platforms that offer crypto services, suggesting an increase in the registration fee for crypto exchanges from 30 million naira ($18,620) to 150 million naira ($93,000).
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