Nigerian SEC Requires Cryptocurrency Firms to Have Local Offices
The Nigerian Securities and Exchange Commission (SEC) has introduced new requirements for Virtual Asset Service Providers (VASPs), requiring them to establish an office in Nigeria to participate in the framework program.
The SEC said in a website post that entities must have an office in Nigeria to qualify for the Accelerated Regulatory Incubation Program (ARIP), which is designed to attract VASPs from the country.
The CEO must reside locally.
Additionally, the CEO or Managing Director must be a resident of Nigeria. Applicants must be engaged in the investment and securities business and have filed or have pending registration with the SEC related to virtual assets.
In a June 21 circular, the SEC directed all existing and potential VASPs, including cryptocurrency brokers and dealers, to complete an application via the SEC ePortal within 30 days.
While the rules governing digital asset issuance, offering platforms, exchanges, and custody are being revised, VASPs must operate under the ARIP for now.
According to the SEC, ARIP aims to accelerate the onboarding process for entities seeking SEC registration, providing interim approval in principle until digital asset rules are fully operational.
This framework applies to virtual asset service providers and token issuers that conduct business in Nigeria or provide services to Nigerian consumers, including platforms that facilitate the offering, trading, exchange, custody and transfer of virtual/digital assets.
Penalties for VASP Non-compliance
Application requirements include a declaration of no conviction for fraud or misconduct, an operating plan, a business model with a clear value proposition, and investor protection provisions.
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The processing fee is 2 million Naira (US$1,277) and applicants are required to provide proof of required shareholder funds. ARIP participants are required to submit weekly and monthly transaction statistics, quarterly financial statements, compliance reports and incident reports.
The SEC said non-compliance with ARIP requirements could result in fines starting at 5 million naira ($3,194) and increasing by 200,000 naira ($127.76) for each day of continued noncompliance.
Unregistered commercial VASPs face a minimum fine of 20 million naira ($12,776), while other digital investment platforms, such as cryptocurrency brokers and advisors, face a minimum fine of 10 million naira ($6,388).
In March, Nigeria’s SEC proposed amendments to the rules guiding platforms offering cryptocurrency services, proposing to increase the registration fee for cryptocurrency exchanges from 30 million naira ($18,620) to 150 million naira ($93,000).
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