SEC says some crypto companies that fell short of requirements may not get final approval

The Nigerian Securities and Exchange Commission (SEC) has noted that some crypto companies that have made regulatory applications may not get its approval. The Commission stated that their application may be declined due to their inability to meet the necessary requirements. 

According to the commission’s Director-General, Dr Emotimi Agama, despite the fact that all applications submitted are under review, it will be impossible to say all will be granted approval.

“Certainly, not all of them will meet the requirements. The commission will keep providing clarity to some knotty areas to assist in the process,” he said. 

While reiterating the transparency of the SEC in the crypto regulation, Agama noted that the commission provides fairness for all applicants in its screening process. He added that the registration process was very strict as it is the bedrock of the regulatory impetus.

“Registration goes beyond onboarding and registering, it requires monitoring, education, and surveillance, and all of these are continuous,” he added.

Agama emphasized that the commission will try to move faster in delivery and announcements concerning regulatory approval. With the experiences gained from this year’s process and the new law in the process of obtaining Presidential assent, he said that the commission will do better next year.

The director also pointed out the readiness of the country to lead crypto regulation and serve as a good example to others. “We are trying to ensure that at the end of the day, as a country we will stand out in the regulation of this space. Beyond any doubt, this space is the future and for us as Nigerians, we have embraced it,” he said. 

In August, the SEC announced that seven crypto entities have been granted an ‘Approval-in-Principle” which include Quidax Technologies Company and Busha Digital Limited. The regulator which oversees registration and operations in the capital markets, granted two Digital Assets Exchanges “Approval-in-Principle” to commence operation under the Accelerated Regulatory Incubation Program (ARIP). 

Likewise, five firms – Trovotech Ltd, Wrapped CBDC Ltd, and Housing Exchange.NG Ltd, Dream City Capital, and Blockvault Custodian Ltd (all Digital Assets Offering Platforms bar BlockVault which is a Digital Asset Custodian) were also admitted to test their models and technology under the SEC’s Regulatory Incubation (RI) Program.

Read More: SEC grants approval in principle to Quidax, Busha, and 5 other Nigerian crypto exchanges.

Newly added SEC regulations

According to the SEC, its newly added laws are aimed at combating the issue of crypto influencers using their popularity to promote spam crypto projects. 

In addition, crypto influencers must also disclose to their community that they are paid to promote a digital asset or a service. Failure to do this could attract a fine of N10 million naira and up to 3 years in prison.

The commission also listed establishing an office in Nigeria as part of the eligibility requirements for companies categorised as Virtual Assets Service Providers (VASPs) in the country. 

The Accelerated Regulatory Incubation Program (ARIP) framework applies to virtual asset service providers and token issuers that carry on business activities in Nigeria or offer services to Nigerian consumers including platforms that facilitate the offering, trading, exchange, custody, and transfer of virtual/digital assets. 

In June, the SEC introduced ARIP in order to on-board firms that had commenced operations prior to the release of the Rules on Virtual Asset Service Providers in May 2022. On the other hand, the RI Program was created to assess the business models of Digital Assets firms.

While reacting to the regulation, Agama stated that the law is firm with its sole aim centred on regulating the crypto space and giving guidance to operators. “All of these are efforts by the SEC to be as friendly as possible, protect the interest of the ecosystem and the interest of investors,” he said.

Significantly, the Nigerian Securities and Exchange Commission has shown signs of willingness to collaborate with local crypto companies, despite the protracted clampdown on major crypto exchanges like Binance and OKX in recent months.