Nigeria’s Securities and Exchange Commission (SEC) amended the regulatory framework governing platforms offering cryptocurrency services on Friday, suggesting increased registration fees for crypto exchanges.
Nigeria’s securities regulatory body is looking to increase registration fees for cryptocurrency firms by 400%, signaling a tightening stance on the sector.
Nigeria’s SEC Proposes Substantial Fee Hikes for Crypto Exchanges
As per the SEC’s notice, the proposed adjustments to the regulatory framework governing crypto issuers, exchanges, and custody platforms encompass substantial increases across all supervision fees.
According to the updated guidelines, digital asset exchanges, offering platforms, and custodians will face a major increase in application fees, rising from 100,000 Naira ($62) to 300,000 Naira ($186).
Additionally, the processing fee is proposed to rise from 300,000 Naira ($186) to 1 million Naira ($620), and the registration fee is set to spike by 400%, from 30 million Naira ($18,620) to 150 million Naira ($93,102).
⚡️💰 Nigeria\'s SEC intends to raise crypto exchange registration fees to 150 million naira ($93k) from 30m naira ($18,620).
This move aims to clarify rules and incorporate feedback from stakeholders and discussions with the Central Bank of Nigeria. pic. .com/o70d8svG3q
— MrPersonalTrader (@MPersonalTrader) March 16, 2024
Reportedly, the SEC asserted that the proposed amendments were formulated to offer clarity and integrate feedback from industry stakeholders, particularly in light of recent engagements with the Central Bank of Nigeria (CBN).
One major proposed change involves renaming the rules and guidelines from “New Rules on Issuance, Offering Platforms, and Custody of Digital Assets” to “Rules on Digital Assets Issuance, Offering Platforms, Exchange, and Custody.”
In May 2022, the Nigerian SEC published the initial 54-page document rules document, which has opened doors for cryptocurrency service providers in Nigeria and detailed guidelines for banking and financial institutions related to digital assets.
Exchanges must obtain a virtual asset service provider (VASP) license from the SEC by complying with the application processing requirements, a registration fee, and other applicable fees. The SEC clarified that these amendments were intended to enhance clarity and incorporate insights from industry stakeholders, as well as reflect discussions with the Central Bank of Nigeria.
Nigeria’s Watchdog Proposes Crypto Regulation Amendments Amidst Binance Accusations
While the SEC attributed these changes to feedback from industry stakeholders, some critics have raised concerns about the proposed 500 million Naira ($310,343) paid-up capital requirement. They argued that such a high fee could disproportionately benefit foreign firms and disadvantage local entities.
Although governmental actions have targeted numerous crypto entities, particular attention has been directed towards the exchange platform Binance. The Nigerian authorities recently accused Binance of manipulating the local currency, the Naira.
This accusation sparked a dispute between Binance and Nigerian authorities, resulting in the detention of two Binance executives who were invited into the country to address the matter.
Additionally, the SEC has made another important proposal: it suggested doubling the minimum paid-up capital requirement for prospective crypto service providers to 1 billion Naira.
The SEC articulated that the proposed amendments would “rearrange” the regulatory landscape, providing clarity to the market and incorporating feedback from industry stakeholders, particularly in light of recent engagements with the Central Bank of Nigeria.
In June 2023, Nigeria abandoned its long-standing currency peg, allowing the Naira to trade freely, leading to record-high inflation. As of January 2024, Nigeria’s consumer inflation has surged for the 13th consecutive month, reaching nearly 30%, according to data from the National Bureau of Statistics, highlighting the country’s economic challenges.
A recent survey featuring respondents from 15 countries indicated that Nigeria, Africa’s largest economy, has the world’s most cryptocurrency-aware population. In Chainalysis’ “2023 Cryptocurrency Geography Report,” Nigeria ranked second in crypto adoption among the 154 countries in the study.
The country’s crypto adoption rate was expected to encourage more foreign crypto investment, but the opposite has been the case.