The Nigerian Securities and Exchange Commission plans to introduce a licensing framework for cryptocurrency exchanges in the nation.
According to Emomotimi Agama, the director general of the Nigerian SEC, the cryptocurrency sector in the nation has witnessed a surge in demand for cryptocurrencies as young Nigerians increasingly prefer this emerging asset class.
How popular are cryptocurrencies in Nigeria?
In an interview with Bloomberg, the SEC director called himself a “crypto enthusiast”, adding:
We must support the youths of this country to be able to achieve the benefit that is accruable in fintech. The market size is huge and it is growing.
With the new licensing system set to be introduced by the end of August, the securities regulator plans to offer a regulated environment for traders while also being able to collect all necessary information and ensuring proper oversight.
However, Agma added that the commission would not tolerate market manipulative activities that could impact the price of the Naira. The SEC had previously announced its intention to ban peer-to-peer cryptocurrency trading using the Naira in this regard.
Cryptocurrencies have become a go-to hedge for people in nations facing economic challenges.
The appetite for cryptocurrencies among Nigerians has propelled the nation to become one of the fastest-growing crypto economies in the world.
In a statement last month, Agma highlighted that Nigeria’s cryptocurrency market was currently valued at over $400 million, and approximately 33.4% of Nigerians were already using cryptocurrencies.
He pointed out that cheaper remittance costs compared to traditional alternatives are one of the key factors behind the nation’s demand for cryptocurrencies, as Nigeria is one of the largest recipients of remittances in Africa.
Further, the decentralized nature of cryptocurrencies helps the unbanked access financial services. These benefits have propelled adoption at grassroots levels, with Agma adding that “some people don’t have bank accounts, but they have wallets.”
Agma is part of a seven-member SEC board that was approved by President Bola Tinubu in April 2024.
Since then, the SEC has updated its digital asset issuance rules and introduced provisions that accommodate Virtual Asset Service Providers.
A nationwide focus on crypto regulations
The SEC’s recent licensing plans come amidst lawmakers’ calls for clearer regulations.
In July, Nigeria’s finance minister Wale Edun, urged the SEC to fast-track crypto asset regulations, which he believes are crucial to maintaining the country’s economic integrity.
Similar initiatives have been observed among other regulators.
The Federal Inland Revenue Service, Nigeria’s tax regulator, also announced plans to increase its oversight of the cryptocurrency market by introducing a comprehensive bill that would allow taxing the crypto sector.
In a recent stakeholder meeting with the National Assembly’s Finance Committees, Zacch Adedeji, the executive chair of Nigeria’s tax regulator, noted that the proposed bill would help regulate the cryptocurrency space, address associated risks, and benefit the national economy.
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