Nigeria’s Securities and Exchange Commission (SEC) is set to accelerate the issuance of crypto licenses in 2025, aiming to establish a clearer regulatory framework for the country’s fast-growing digital asset market. The move is part of the regulator’s broader efforts to enhance consumer protection, curb fraud, and foster a more structured crypto ecosystem.
Since launching the Accelerated Regulatory Incubation Programme (ARIP) in June 2024, the SEC has granted provisional licenses to two Nigerian crypto startups, Quidax and Busha. At a workshop in December 2024, the Commission signaled plans to “move a lot quicker” in issuing additional approvals this year, according to a source familiar with the discussions.
Crypto Adoption and the Need for Regulation
Nigeria is one of Africa’s most active cryptocurrency markets, with individuals and businesses leveraging crypto and stablecoins to hedge against inflation and exchange rate volatility. However, the absence of clear regulatory guidelines has fueled uncertainty among users and investors.
A report from Busha revealed that nearly 50% of 1,500 surveyed Nigerians—both crypto users and non-users—cited security concerns as a major barrier to adoption.
Key risks in Nigeria’s crypto space include:
- Security vulnerabilities on centralized exchanges, where one misstep can lead to financial loss.
- Peer-to-peer (P2P) risks, with new users often paying higher fees due to limited knowledge of blockchain networks.
- Rug-pull scams, particularly with the rise of meme coins, where developers inflate a token’s value before dumping their holdings, causing a price crash.
“Scammers thrive in the crypto space. If you don’t know what you’re doing, you’re at risk of losing money,” said Chibunna Kingsley, a crypto trader in Lagos.
While crypto platforms have invested heavily in user education, experts argue that regulators must take the lead in ensuring consumer protection.
“If you’re a regulator, consumer protection should be a top priority,” said Craig Stoehr, General Counsel at Yellow Card, a crypto startup. “The SEC has made more progress in the past nine months than in the two years before ARIP.”
The Evolution of Crypto Regulation in Nigeria
Regulatory discussions on digital assets began in September 2020, when the SEC first introduced a framework for crypto oversight. By 2022, the Commission outlined how crypto assets should be classified under securities laws. In March 2024, it mandated that all Virtual Asset Service Providers (VASPs) register with the SEC.
A major shift came in December 2023, when the Central Bank of Nigeria (CBN) lifted its crypto ban, paving the way for banks to provide services to crypto startups. This allowed firms like Quidax, Busha, and Yellow Card to access banking infrastructure—although some financial institutions remain hesitant.
How the Licensing Process Works
Under the ARIP, both local and international crypto startups—including Quidax, Busha, Yellow Card, Borderlesspay, and Bitnob—have applied for provisional licenses. The process involves:
- Paying an assessment fee of ₦200,000 and a non-refundable processing fee of ₦2 million.
- Answering regulatory questions on the SEC’s e-portal.
- Participating in a demo session, where companies showcase their compliance measures, particularly those related to consumer protection and fraud prevention.
“The process was thorough,” said Tobenna Igweonu, a lawyer representing Quidax. “We had to demonstrate how funds flow through our platform while addressing security concerns.”
Challenges and the Road Ahead
Despite regulatory progress, Nigerian banks remain cautious about engaging with crypto companies. Some institutions disguise their crypto affiliations, operating as “investment firms” to avoid scrutiny.
“Banks don’t openly work with crypto companies,” said a Lagos-based banker who spoke anonymously. “They engage with them under alternative classifications.”
A well-defined regulatory structure could encourage more institutional investors and banks to explore crypto opportunities while also creating a framework for taxing digital asset transactions, a policy Nigeria has considered since 2022.
Balancing Innovation and Regulation
The SEC’s ARIP is considered one of Africa’s boldest efforts to regulate cryptocurrency. However, experts caution against overregulation, which could stifle innovation and push crypto businesses to more crypto-friendly jurisdictions.
“The SEC is on the right path, but they must balance compliance with innovation,” said Chuta Chimezie, a member of the Nigerian Blockchain Committee.
As Nigeria’s SEC gears up to fast-track crypto licensing in 2025, its challenge will be crafting a regulatory framework that protects consumers, fosters trust, and ensures the country remains a competitive player in the global digital asset economy.