Guidelines are critiqued for favoring foreign firms and ignoring domestic exchanges.
Nigeria's crypto regulations have come under criticism from local industry experts who argue that the rules favor foreign companies over domestic startups.
The regulations in question stem from licensing requirements issued by the Nigerian Securities and Exchange Commission (SEC) in 2022 for virtual asset service providers (VASPs), including cryptocurrency exchanges. Under the SEC rules, VASPs must pay a registration fee, meet minimum capital requirements of 500 million naira ($556,620), and comply with other guidelines.
According to Rume Ophi, a Nigerian crypto analyst, these regulations make it difficult for local crypto exchanges to obtain licenses and operate legally. He explained that the existing guidelines provided by the SEC to guide the registration of VASPs are not favorable to indigenous crypto exchanges.
Ophi explained that many local startups cannot afford the steep capital requirements which he says will result in primarily foreign companies being licensed rather than a healthy mix of domestic and international firms.
Supporting this perspective is Kue Barinor Paul, a Nigerian Web3 legal expert, who predicts local exchanges may have to consolidate just to meet the minimum capital thresholds for SEC approval. He urged the SEC to revisit the framework to be more inclusive of homegrown crypto innovators.
The rules come despite Nigeria's strong embrace of cryptocurrencies and its potential to drive economic growth. The country boasts the highest crypto awareness globally, per a recent 15-nation survey. And Nigeria ranked 2nd for adoption out of 154 nations analyzed by Chainalysis in its 2023 report.
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