The Nigerian Securities and Exchange Commission (SEC) has granted provisional licenses or “Approval-in-Principle” to two cryptocurrency exchanges — Quidax and Busha — as part of its accelerated regulatory incubation program (ARIP).
The ARIP was created to onboard firms which had commenced operations prior to the release of the rules on virtual asset service Providers in May 2022.
This means that Quidax and Busha are now part of an ARIP cohort as digital asset exchanges. The cohort also comprises four digital asset offering platforms and one digital asset custodian.
Also read: Busha raises $4.2m seed for Africa-wide expansion.
The digital asset offering platforms are Trovotech, Wrapped CBDC, HousingExhange, and Dream City Capital. The one digital asset custodian is Blockvault Custodian.
The SEC outlined the commission's commitment to fostering innovation while ensuring investor protection and market integrity. The introduction of these licenses is part of a broader regulatory framework designed to bring order to the previously ambiguous crypto space in Nigeria.
It also emphasised that the program aims to balance innovation with necessary regulatory safeguards, creating a secure environment for both investors and industry participants.
This move is particularly noteworthy considering the history of regulatory challenges faced by crypto exchanges in Nigeria.
Crypto companies have been facing problems in Nigeria
Issues facing crypto companies in Nigeria have gotten progressively worse since what has been described as a crypto ban by the Central Bank of Nigeria (CBN) in February 2021. The ban stopped financial institutions from facilitating crypto transactions, citing concerns about market volatility, illicit activities, and the lack of consumer protection.
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While the ban was lifted in 2023, it led to significant disruptions for exchanges and users alike, forcing many to operate in a regulatory grey area or to cease operations altogether.
Interestingly, more clampdowns came on crypto exchanges after the ban was lifted. As of now websites of crypto exchanges such as Coinbase and Binance are not reachable in Nigeria except with VPNs. Binance especially has been in a saga with the Nigerian government over claims that it is responsible for the dwindling value of the naira.
While the global exchange has denied these claims, one of its employees Tigran Gambaryan has been held in custody by the Nigerian government for over six months. In February, two Binance executives, Tigran Gambaryan and Nadeem Anjarwalla, were detained in Nigeria on charges of tax evasion and money laundering. While Anjarwalla reportedly escaped, Gambaryan has been repeatedly appearing in court.
Among the two exchanges granted licenses, there had been rumours of Quidax's licence some weeks ago. The startup which has been operational since 2018, sees this as a milestone not just for the company but for the entire Nigerian crypto community. Buchi Okoro, Co-founder and CEO of Quidax, expressed his optimism about the future of crypto in Nigeria, highlighting that the license is a testament to the company’s commitment to safety, security, and compliance.
"We commend the SEC for taking this bold step to bring order, confidence, and investor protection to our industry," Okoro said.
"This is a big win for Nigeria’s embrace of crypto, and we are glad to be a part of this historical moment." Okoro also pointed out that this regulatory milestone will enable Quidax to collaborate more effectively with banks and other financial institutions, further integrating cryptocurrency into Nigeria’s financial ecosystem.
The issuance of these licenses is expected to have far-reaching implications for the Nigerian crypto market. For exchanges, this development could mean enhanced partnerships with traditional financial institutions, increased investor confidence, and the potential for expanded services.
However, challenges remain. The crypto industry must navigate the evolving regulatory landscape, ensuring that compliance does not stifle innovation. Additionally, the Central Bank's position on cryptocurrency remains a critical factor, as full integration of crypto services into the financial system will require alignment between the SEC and CBN's policies.
For crypto exchanges like Quidax, the SEC's licensing program is a significant step forward, signalling a new era of growth and legitimacy in Nigeria's digital asset market. As the country continues to embrace digital finance, these developments could position Nigeria as a leader in crypto regulation and innovation in Africa.
