Nigeria Proposes Rule Requiring Foreign Crypto Exchanges to Incorporate in the Country

Nigeria flag and crypto coins

The Nigerian Securities Regulator has suggested a regulation mandating virtual asset service providers to register and maintain an office in Nigeria. The agency has also proposed a fivefold increase in the registration cost, which must be submitted with licensing applications from prospective cryptocurrency exchanges.

Proposed Regulations for Foreign Operators

The proposed revisions to the regulations regulating digital asset businesses by the Nigerian Securities and Exchange Commission (SEC) state that a company “seeking to operate as a VASP [Virtual Asset Service Provider] must be incorporated and maintain an office in Nigeria.” The SEC also suggested that the CEO or managing director live in Nigeria.

In a statement published on March 15, the Nigerian securities regulator declared that the new regulations would apply to “all platforms facilitating the trading, exchange, and transfer of virtual assets.” The proposed regulatory amendments would also apply to foreign and non-residential operators who directly or indirectly target Nigerian consumers, according to the regulator.

Meanwhile, the SEC underlined that the new requirements do not apply to IT companies that provide supporting infrastructure or software for digital asset exchanges. Similarly, the restrictions will not apply to financial portals, which aggregate material and links to service and information providers’ financial websites.

SEC Proposes Hike Fees

With the lack of regulations directly targeting international crypto exchanges, Nigerian authorities have issued instructions, including one asking telecom companies to ban some digital asset sites. Authorities have also taken direct action against Binance, which is accused of transferring $26 billion out of the country, arresting two of the cryptocurrency exchange’s senior executives.

However, in its most recent recommendations, the Nigerian SEC replaced the need for international cryptocurrency exchanges to have 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 abbreviation CMO, some in the Nigerian cryptocurrency community understand it as a reference to a Capital Market Operator.

Aside from proposing regulatory modifications, the SEC has altered the different costs that cryptocurrency licensing applicants must pay. For example, the regulator recommends raising the filing or application cost from around $63.00 (NGN100,000) to $188.40 (NGN300,000). The agency also proposed raising the registration price fivefold, from $18,840 to $94,200.

Author: Simeon

Simeon is a seasoned crypto writer with a passion for exploring the fascinating world of blockchain and digital currencies. With a background in finance and technology, Simeon brings a unique perspective to his writing, delving into the complexities of decentralized finance, cryptocurrency trading, and emerging blockchain projects.