On Thursday, the Securities and Exchange Commission (SEC) granted Approval-in-Principle to two Digital Asset Exchanges, officially welcoming them into the Accelerated Regulatory Incubation Program (ARIP).
The exchanges, Busha Digital Limited and Quidax Technologies
Limited, provide platforms for the buying and selling of cryptocurrencies.
The SEC also announced the admission of five additional
firms into the Regulatory Incubation (RI) Program, which allows these companies
to test their business models and technological innovations under the SEC's
close oversight.
The ARIP was launched as a strategic initiative to support
firms that began operations prior to the introduction of the Rules on Virtual
Asset Service Providers in May 2022.
Conversely, the RI Program was created to assess the
business models of digital asset firms, enabling them to trial innovative
products, services, and technologies in a controlled, real-time market setting.
The current participants in both the ARIP and RI Programs
are characterized by a growing use of distributed ledger technology (DLT) in
the development and trading of crypto assets.
"Millions of Nigerian crypto enthusiasts and users
deserve safe and moderated local venues for managing and trading crypto-assets,
and this is an overdue step to sanitise the space for the benefit of the
economy, in line with global expectations," stated Busha CEO Michael
Adeyeri on X.
Buchi Okoro, the CEO of Quidax, has also verified this
development on X. Busha offers a platform that enables users in Nigeria and
other emerging markets to engage in digital asset investment services, whereas
Quidax runs a cryptocurrency trading platform that utilizes proprietary
blockchain technology for the listing and trading of existing crypto tokens.
The five companies participating in the RI Program represent
diverse areas within the digital asset ecosystem.
For example, Trovotech Ltd has created a blockchain-based
platform designed for the creation and trading of tokenized illiquid assets
from the real world, including housing and infrastructure.
Wrapped CBDC Ltd intends to launch a stablecoin issued in
Nigeria, pegged at N1:N1, to support both local and international crypto
transactions.
HousingExhange.NG Ltd focuses on enabling property
developers to secure funding through tokenization, while Dream City Capital
provides a platform for investments in digital real estate.
Blockvault has gained recognition for its custodial services
related to digital assets, offering a secure framework for the storage and
management of these assets.
The SEC highlighted that the approvals provided are
preliminary steps towards full registration, aimed at ensuring that strong
consumer protection and transparency protocols are established for each product
or service.
The regulatory authority also stressed that only licensed
digital exchanges and platforms are permitted to operate within Nigeria,
advising the public to avoid interactions with unapproved entities.
This development signifies a notable shift in the
regulator's approach to granting licenses for cryptocurrency platforms.
Despite previous resistance from Nigerian authorities
regarding cryptocurrencies, there remains a vibrant trading activity among
Nigerians, positioning the country among the leaders in global cryptocurrency
trading.
The Central Bank of Nigeria (CBN) had previously lifted a
two-year prohibition on banking transactions involving cryptocurrencies,
indicating a possible change in the regulatory environment.
The regulator has voiced concerns regarding the influence of
peer-to-peer (P2P) trading on the fluctuations of the foreign exchange (FX)
market.
In May 2024, SEC’s Director General, Emomotimi Agama,
engaged with key stakeholders in the crypto sector, reiterating the necessity
for exchanges to remove the naira from P2P trading.
This action highlights the commission's commitment to
stabilizing the local currency while enhancing oversight of cryptocurrency
transactions.