Nigeria issues 30day deadline to VASPs for adherence to new regulations

Nigeria’s financial authorities have mandated that Virtual Asset Service Providers (VASPs) update their applications within 30 days to comply with new rules concerning digital asset issuance, offering platforms, exchange, and custody.
In a move aimed at bolstering the regulatory framework for digital assets, the Nigerian Securities and Exchange Commission (SEC) has announced plans to update crucial digital assets regulations in an official notice to the public. The amendments are designed to make the regulatory framework more comprehensive and adaptable to the complexities of digital asset markets.
As part of this regulatory update, the SEC has introduced the Accelerated Regulatory Incubation Programme (ARIP), a specialized compliance initiative tailored for virtual asset service providers (VASPs). The program offers VASPs a structured pathway to align with the country’s new regulatory standards. A dedicated onboarding window has been established to facilitate VASPs’ participation in the ARIP, according to information published on the SEC’s website.
In addition, the SEC has stated that it will initiate enforcement actions against any operating VASP that does not comply with the directives outlined in its Circular. These regulatory updates are part of Nigeria’s broader initiatives to enhance oversight of its rapidly expanding cryptocurrency market.
In another significant move, the Central Bank of Nigeria (CBN) has issued guidelines governing banking relationships and account operations for Virtual Asset Service Providers (VASPs) in the country, in coordination with the SEC.
Nigeria’s approach to cryptocurrencies has undergone a notable shift since 2021. Initially, the central bank banned banks from facilitating cryptocurrency transactions. However, cryptocurrency adoption has continued to rise, prompting the government to pivot towards a taxation policy.
This shift is evident in the timeline of events:
– In February 2021, the CBN issued a circular directing banks, non-bank financial institutions, and other financial entities to close accounts associated with cryptocurrency transactions within their systems.
– Subsequently, the CBN launched an investigation into financial institutions providing services to cryptocurrency traders and clarified its position on individuals buying and trading cryptocurrencies.
– In April 2022, the SEC formally recognized digital assets as securities and issued comprehensive regulations governing the exchange and custody of cryptocurrencies within Nigeria. The Economic and Financial Crimes Commission (EFCC) also warned Nigerians about the risks of investing in Bitcoin (BTC).
– In July 2021, the CBN announced plans to launch the “eNaira,” a central bank digital currency (CBDC), distinct from Bitcoin and other cryptocurrencies.
– By December 2022, provisions were made in the latest finance bill to impose taxes on cryptocurrencies and other digital assets, and the 2023 finance bill was signed into law, instituting a 10% tax on gains from the disposal of digital assets.
Despite regulatory challenges, Nigeria continues to stand out as a global leader in cryptocurrency adoption, with the volume of crypto transactions in the country increasing by 9% year-over-year to $56.7 billion between July 2022 and June 2023.