After months of blaming crypto for all sins, Nigerian authorities have finally gotten their act together and are showing signs of starting to regulate crypto in the country.

Nigeria's Securities and Exchange Commission (SEC) issued its original guidelines, called the "Rules on Digital Assets Issuance, Offering Platforms, Exchange and Custody," in May 2022, but no major changes have been adopted since then. Apparently now, though, the new pro-crypto chair of the SEC, Emomotimi Agama, has streamlined the process of creating a regulatory framework, starting with licensing the exchanges. 

At the end of June, after Agama's appointment, the SEC announced amendments to the above-mentioned rules, aiming to “expand the scope of regulation in line with the current realities.” The regulator introduced two special incubation programs to help VASPs comply with new regulatory requirements. This required all operating companies to complete the application process within 30 days and promised to crack down on all non-compliant entities. 

At the end of August, the regulator reported that two African-founded exchanges, Quidax Technologies, and Busha Digital, were granted approval in principle to commence operations under the program, both of which had commenced operations prior to the release of the rules in 2022. Five more younger firms were admitted to test their models and technology under another program.

On August 29, Quidax announced it had become the first crypto exchange to register with Nigeria's SEC as a Digital Assets Exchange. The same day, Busha shared that it was also granted a provisional license and led the way as “Nigeria’s pioneering SEC-licensed virtual asset service provider.” The provisional operating license allows the companies to collaborate with banks and other financial institutions, subject to the Central Bank of Nigeria's approval.

“We commend the SEC under the leadership of Dr. Emomotimi Agama, for taking the bold step to bring order, confidence and investor protection to our industry. This is a big win for Nigeria's embrace of crypto,” - commented co-founder and CEO of Quidax.

The local crypto community supports the creation of a balanced regulatory framework instead of impulsive high-profile cases, bans, inconsistent restrictions, and general criminalization of crypto. 

“Nigeria is a big player globally in cryptocurrency that it cannot afford not to regulate crypto,” - said a former president of the Stakeholders in Blockchain Technology Association of Nigeria in an interview.

We expect that other local exchanges will follow and seek the SEC’s license. Perhaps Binance’s heavy punishment will be enough of a reason for compliance among VASPs operating in Nigeria.

Speaking of which, we haven't recently seen any major updates to the high-profile lawsuit against Binance. Tigran Gambaryan, who was detained as an exchange representative in Nigeria in February 2024 for charges related to money laundering, remains in prison. During the latest hearing on September 2, a Binance employee’s attorney filed a new motion to bail, which was again opposed by the prosecution. Reportedly, medical records indicate that the detainee requires surgery. The video from the court confirmed speculation of Gambaryan’s worsening health condition, raised outrage against inhumane treatment, and renewed calls for Gambaryan’s release. The next hearing, when the judge will consider Gambaryan’s bail, is expected on September 4. 

Making the situation in Nigeria even more controversial, crypto-related issues are intertwined with ongoing #EndBadGovernance protests. In August, Nigerians were protesting against the rising cost of living caused by the rapid devaluation of their local currency, the naira. Initially, authorities chose crypto as a scapegoat, blaming exchanges for manipulating the exchange rate. Nigerian authorities reportedly traced $50 million in cryptocurrency sent to support recent protests and issued an order to freeze almost $38 million. Meanwhile, some crypto enthusiasts were trying to include crypto-related demands in the ongoing protest agenda. 

Despite the scrutiny of the authorities, Nigeria remains a country with high crypto adoption and awareness levels. Nigeria was ranked as the most crypto-aware country in the world with extremely positive general sentiment towards crypto. Thus, the local crypto industry still has hope for a better future, especially if clear regulations are adopted and potential investors feel protected. We will continue to Observe the controversial actions of the government in Nigeria. 

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