Nigeria’s Securities and Exchange Commission (SEC) has announced a significant new requirement for virtual asset service providers (VASPs), stipulating that they must establish a physical presence within Nigeria to participate in its regulatory framework.
In a statement posted on its official website, the SEC outlined that VASPs must be incorporated in Nigeria and maintain an operational office to qualify for the Accelerated Regulatory Incubation Programme (ARIP). This initiative is specifically designed to facilitate the integration of VASPs into the Nigerian market.
Furthermore, the SEC directive mandates that the CEO or managing director of these entities must reside within Nigeria. Eligible applicants must be actively involved in investment and securities activities, either in the process of seeking registration or with pending applications pertaining to virtual assets under SEC oversight.
Issued through a circular on June 21, the SEC instructed all current and prospective VASPs, including cryptocurrency brokers and dealers, to complete their applications via the SEC ePortal within a 30-day timeframe. During this period, while regulations on digital assets issuance, trading platforms, exchanges, and custody are under review, VASPs are required to operate within the guidelines set by the ARIP.
According to the SEC, the primary objective of the ARIP is to expedite the registration process for entities seeking SEC approval. It offers provisional approval pending the full implementation of the Digital Assets Rules.
This regulatory framework applies to virtual asset service providers and token issuers conducting business in Nigeria or offering services to Nigerian consumers. This includes platforms facilitating the offering, trading, exchange, custody, and transfer of digital assets.
Non-compliance with ARIP requirements carries substantial penalties. Applicants must submit a sworn statement confirming no history of fraud or dishonesty convictions, along with an operational plan and a business model that outlines a clear value proposition and investor protection measures.
Additionally, applicants are required to pay a processing fee of 2 million naira ($1,277) and provide evidence of the necessary shareholder funds. Participants in the ARIP must submit regular trading statistics on a weekly and monthly basis, quarterly financial reports, compliance updates, and incident reports.
The SEC has specified that failure to comply with ARIP standards could result in penalties, starting at 5 million naira ($3,194) and increasing by 200,000 naira ($127.76) per day for continued non-compliance. Unregistered commercial VASPs face penalties starting at 20 million naira ($12,776), while other digital investment platforms, such as crypto brokers and advisers, face fines of at least 10 million naira ($6,388).
In March, Nigeria’s SEC proposed amendments to regulations governing platforms offering crypto services, including 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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