Despite the Central Bank of Nigeria (CBN) easing restrictions on local banks for crypto transactions, the stringent crypto license demands from the Nigerian Securities Exchange Commission (SEC) are poised to shrink the operational landscape of domestic crypto exchanges dramatically. Renowned Nigerian crypto analyst Rume Ophi emphasizes the potential impact of this regulatory clash.
During a recent interview, Rume highlighted local exchanges’ financial challenges, emphasizing that the hefty minimum paid-up capital demand of $556,620 (N500 million naira) renders many unviable. He expressed concern that this stringent requirement might tilt the operational landscape favoring foreign exchanges, disrupting the desired equilibrium within Nigeria’s cryptocurrency market.
In May 2022, the Nigerian Securities and Exchange Commission (SEC) unveiled a 54-page document titled “Innovative Guidelines for the Issuance, Offering Platforms, and Custodial Management of Digital Assets,” prominently featured on its official website.
This document paves the way for cryptocurrency service providers in Nigeria, presenting a comprehensive guide for the country’s banking and financial institutions on navigating their interactions with digital assets.
Nigeria Crypto Crown: Unveiling The World’s Most Cryptocurrency-Savvy Nation
SEC regulations mandate exchanges to obtain a Virtual Asset Service Provider (VASP) license from the SEC. This entails adhering to the stipulations for application processing, registration fees, and other relevant charges.
Moreover, A comprehensive international study encompassing participants from 15 nations reveals that Nigeria, the largest economy in Africa, boasts the world’s most cryptocurrency-savvy populace. According to Chainalysis’ 2020 Cryptocurrency Geography Report, Nigeria secured the eighth position in cryptocurrency adoption and usage among the 154 countries scrutinized in the research.
Nevertheless, the opposite outcome has occurred despite anticipating a boost in foreign crypto investment due to the country’s expected high crypto adoption rate. Rume highlighted that restricting financial institutions from engaging with crypto exchanges is responsible for the diminished investment activity.
However, Rume clarified that the recent reversal of the CBN ban would pave the way for an increase in Nigeria’s foreign investment in the crypto sector, fostering employment opportunities for locals in both Web3 and the broader cryptocurrency industry.
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The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.
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