Nigeria's SEC to Intensify Oversight of Unregulated Crypto Exchanges

2 min read | September 09, 2024 10:53 PM AEST | By Team Kalkine Media

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Nigeria’s Securities and Exchange Commission (SEC) is set to enforce regulations on cryptocurrency businesses operating without proper oversight, aiming to protect participants in the digital asset market while fostering innovation.

Emomotimi Agama, the Director-General of Nigeria’s SEC, announced plans to take action against entities engaged in unregulated cryptocurrency activities. This move, reported by Nairametrics on September 9, underscores the SEC’s commitment to ensuring that only regulated entities operate within the crypto space.

Currently, only two {crypto} currency exchanges, Busha Digital and Quidax Technologies, hold official regulatory approval from the SEC. These approvals were granted on August 29, 2024, and mark a significant step in the regulatory framework for digital assets in Nigeria. Agama highlighted that the recent regulatory actions reflect the growing interest among young Nigerians in digital assets and the necessity for a clear and protective regulatory environment.

The SEC's oversight will encompass compliance with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) protocols. This regulatory scrutiny is intended to ensure that crypto-related activities adhere to established financial security standards.

Despite Nigeria’s position as a prominent player in the global cryptocurrency market, its regulatory approach has faced criticism for inconsistency and lack of clarity. In early 2021, the Central Bank of Nigeria (CBN) imposed a broad ban on cryptocurrencies, prohibiting financial institutions from engaging with crypto exchanges. However, this ban was lifted in early 2023, and the SEC subsequently introduced a regulatory framework for cryptocurrency exchanges.

In May 2024, the CBN implemented new regulations that restrict peer-to-peer crypto transactions involving the Nigerian naira. Furthermore, international exchanges like Binance have faced stringent regulatory actions. Binance’s exit from Nigeria in March 2024 did not preclude local authorities from detaining Binance’s head of financial crime compliance, Tigran Gambaryan. Gambaryan has been held in detention since February, with a bail decision anticipated in October.

Overall, Nigeria’s evolving regulatory landscape for cryptocurrencies aims to balance investor protection with the promotion of innovation within the growing digital asset sector.

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