The Nigerian Securities and Exchange Commission (SEC) has taken a significant step forward in the regulation of digital assets by issuing provisional licenses to two cryptocurrency exchanges, Quidax and Busha. This move comes just a week after the SEC indicated its intention to begin granting its inaugural set of cryptocurrency licenses.
In a statement released on Thursday, the SEC clarified that these Approvals-in-Principle are preliminary steps towards full registration and are designed to ensure that each product or service offered by the exchanges meets the necessary standards of protection and transparency for users.
Quidax and Busha are set to operate under the SEC’s Accelerated Regulatory Incubation Program (ARIP), which was launched in July 2024. ARIP aims to integrate crypto exchanges that were already operational before the SEC’s May 2022 issuance of regulations for virtual asset service providers.
Emomotimi Agama, the SEC Director General, explained during an interview that the license allows the startups to enter the SEC’s regulatory incubation framework. This program enables the SEC to closely observe the exchanges’ operations and develop appropriate regulatory guidelines.
Busha’s CEO, Michael Adeyeri, expressed his support for the development in a statement on X, emphasizing that Nigerian crypto users deserve secure and regulated local platforms for handling and trading crypto-assets. He views the SEC’s decision as a critical step in aligning the local crypto market with international standards and for the broader benefit of Nigeria’s economy.
Quidax also confirmed receipt of the provisional license, marking an end to the period of uncertainty regarding the SEC’s position on crypto licensing. Previous reports had falsely claimed that the SEC had granted a provisional license to a major crypto platform, which the regulator refuted.
Earlier in January 2024, there were reports that discussions were underway between at least two crypto exchanges and the SEC for a crypto license, following the Central Bank’s reversal of a two-year prohibition on crypto-related banking transactions.
The SEC’s recent actions represent a major policy shift for crypto exchanges in Nigeria, which have been under increased regulatory scrutiny since February 2024. The SEC has previously considered banning P2P trading, which Nigerian authorities associate with FX market volatility. In May 2024, the SEC DG met with representatives from the crypto industry and reiterated the necessity for exchanges to remove the Nigerian naira from P2P trading platforms.
