The Nigerian Securities Regulator has proposed a rule requiring virtual asset service providers to be incorporated and maintain an office within Nigeria. The regulator has also suggested a fivefold increase in the registration fee, which must be submitted alongside license applications from prospective crypto exchanges.
Nigeria Proposes Rule Requiring Foreign Crypto Exchanges to Incorporate in the Country
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Proposed Regulations to Foreign Operators Targeting Nigerian Users
According to the proposed amendments to the rules governing digital asset entities by the Nigerian Securities and Exchange Commission (SEC), a company “seeking to operate as a VASP [Virtual Asset Service Provider] must be incorporated and maintain an office in Nigeria.” The SEC also proposed that the CEO or managing director must reside in Nigeria.
In a document released on March 15, the Nigerian securities regulator stated that the new rules would apply to “all platforms facilitating the trading, exchange, and transfer of virtual assets.” Foreign or non-residential operators targeting Nigerian users directly or through their agents will also be subject to the proposed rule changes, the regulator added.
Meanwhile, the SEC also clarified that the proposed rules will not apply to tech firms providing supporting infrastructure or software to digital asset exchanges. Similarly, the rules will not apply to financial portals that aggregate content and provide links to the financial sites of service and information providers.
Although the SEC did not explain its reasons for proposing the amendments, the timing of the announcement suggests that Nigeria is attempting to strengthen its ability to control foreign crypto exchanges. In recent weeks, Nigerian officials have accused global crypto exchanges, including Binance, of contributing to the rapid depreciation of the local currency.
SEC Proposes to Hike Fees
In the absence of rules specifically targeting foreign crypto exchanges, Nigerian authorities have issued directives, including an order instructing telecom operators to block certain digital asset platforms. Authorities have also taken direct action against Binance, which is accused of moving $26 billion out of the country, by detaining two senior executives of the crypto exchange.
However, in its latest proposals, the Nigerian SEC replaced the requirement obligating foreign crypto exchanges to establish a local office with a broader rule.
“Existing CMOs registered to provide trading, offering platforms and custodial services seeking registration under these Rules, may be required to establish a subsidiary/separate entity to take up the function,” the SEC said.
While the SEC does not define the acronym CMO, individuals in the Nigerian crypto space interpret this as a reference to a Capital Market Operator.
Besides proposing rule changes, the SEC has also revised the various fees that crypto license applicants are required to pay. For example, the regulator proposes to increase the filing or application fee from approximately $63.00 (NGN100,000) to $188.40 (NGN300,000). The regulator also proposes a fivefold increase in the registration fee from $18,840 to $94,200.
According to the SEC, stakeholders wishing to comment on the proposals must submit their feedback to the Secretariat of the Rules Committee no later than two weeks from the date of publication on the website.
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