Nigerian SEC wants all operating crypto firms to set up a local office

Nigerian SEC wants all operating crypto firms to set up a local office
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The Securities Exchange Commission Nigeria wants all crypto firms offering services in the country to set up a local office. 

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In a recent update on its website, SEC Nigeria had stated setting up an office as a requirement for qualifying to be incubated into the Accelerated Regulatory Incubation Programme (ARIP), which is designed to onboard VASPs in the country.

The requirement also states that applicants must report customer complaints and emergent risks to the SEC. Applicants are also subject to SEC inspections, audits and monitoring.

As part of the requirements, applicants are to include a sworn undertaking agreement with no fraud and fair play agreement, a proper record keeping, commission returns, clear business model and provisions for customer protection. 

What is the Purpose of ARIP?

The main purpose of ARIP is to accelerate the onboarding of Entities whose applications have been filed with the Commission, and for other potential applicants seeking to be registered 

with the Commission. 

This will enable qualified entities to obtain approval in principle from the Commission pending when the Digital Assets Rules become operational. 

Read Also: Nigerian government to tax crypto traders a 7.5% VAT in transaction fees on KuCoin

CEO or the equivalent must reside locally

The ARIP eligibility criteria requires the applicant’s CEO, managing director or its equivalent to reside in Nigeria. Applicants must be involved in investment and securities business. Also seek registration or have pending applications related to virtual assets with the SEC.

In June 21, SEC released a circular, directing all existing and prospective VASPs, including crypto brokers and dealers, to complete their applications via the SEC ePortal within 30 days.

Stipulated Fines for defaulters

The processing fee is 2 million naira ($1,277) at current rate, and applicants must provide evidence of required shareholder funds. ARIP participants are expected to submit weekly and monthly trading statistics, quarterly financials, compliance reports and incident reports.

The SEC states that the ARIP participants who fail to comply with the ARIP requirements could face penalties starting at 5 million naira ($3,194) and increasing by 200,000 naira ($127.76) daily for continued default.

Unregistered commercial VASPs face penalties of at least 20 million naira ($12,776), while other digital investment platforms, such as crypto brokers and advisers, face fines of at least 10 million naira ($6,388).

There is an increasing interest from regulators in Nigeria towards virtual assets providers and in providing a complaint regulatory environment.

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