Nigeria gets two crypto exchanges
Nigeria’s financial landscape is on the brink of a transformative shift, as the Securities and Exchange Commission (SEC) has granted “Approval-in-Principle” to two digital asset exchanges, Busha Digital Limited and Quidax Technologies Limited. This landmark decision marks a significant recognition of the growing influence of cryptocurrencies and digital finance in the country.
The SEC’s recent approvals, announced yesterday, are part of its Accelerated Regulatory Incubation Programme (ARIP), aimed at fostering innovation while ensuring consumer protection and market integrity. The approval of these exchanges not only underscores the SEC’s commitment to embracing new financial technologies but also highlights Nigeria’s readiness to become a leading player in the global digital economy.
Busha Digital Limited and Quidax Technologies Limited are the first digital asset exchanges to receive such approvals under the SEC’s regulatory framework. As pioneers, they are set to pave the way for other digital asset firms in the country. Both exchanges are part of a cohort that includes two digital asset exchanges, four digital asset offering platforms, and one digital asset custodian, all participating in the ARIP.
Busha operates a digital exchange platform that allows users to buy and sell cryptocurrencies using fiat currency. It offers a comprehensive suite of services that enable individuals and businesses in Nigeria, and other developing economies, to access digital asset investment opportunities. Through its mobile and web applications, Busha’s customers can buy, sell, store, send, receive, trade, invest, and make payments in a variety of cryptocurrencies.
Quidax Technologies Limited, on the other hand, operates a cryptocurrency trading platform in Nigeria, leveraging blockchain technology to list and trade already-issued crypto tokens. Quidax provides its services via a proprietary blockchain, controlled by the company, and supports a digital wallet that enables users to store, receive, and transact in various cryptocurrencies. The platform is accessible both via the web and mobile, ensuring ease of use and accessibility for a broad range of users.
The SEC’s “Approval-in-Principle” for these exchanges is a precursor to full registration, intended to ensure that adequate consumer protection measures and transparency are in place for each product and service offered. According to the SEC, this initial approval phase allows for a controlled environment where the platforms can operate under close supervision, adhering to the highest standards of financial integrity and consumer safeguards.
“The referenced Approvals-in-Principle are a precursor to the grant of full registration by the SEC and are meant to ensure that appropriate protection and transparency is in place in respect of each product or service,” the SEC stated. This cautious yet forward-thinking approach is designed to balance innovation with security, ensuring that the burgeoning digital asset market develops in a way that is safe and beneficial for all participants.
The current cohort, which includes Busha and Quidax, is characterized by the increased use of distributed ledger technology (DLT) in creating and trading crypto assets. The SEC has indicated that the outcome of this regulatory incubation process will inform future policy development in the digital asset space. The commission will conduct tests on a short-term and small-scale basis, working closely with participating firms to define testing parameters and establish robust consumer safeguards.
Only approved digital exchanges and platforms are legally authorized to conduct crypto trading in Nigeria, and the SEC has emphasized that its onboarding programs are the only legitimate avenues for entities to introduce their digital products and services to the Nigerian capital market. The commission has also advised the public to avoid dealing with illegal operators who have not received SEC approvals for their activities. “Intending investors are also reminded to always confirm from the various SEC information portals whether entities purporting to provide investment services are legally empowered to do so,” the SEC advised.
Additionally, the SEC has admitted five firms to test their models and technologies under its Regulatory Incubation Programme (RI). These firms include Trovotech Ltd, Wrapped CBDC Ltd, HousingExchange.NG Ltd, Dream City Capital, and Blockvault Custodian Ltd. The RI Programme was created to assess the business models of digital asset firms and test innovative products, services, and technologies in a real-time market environment under close supervision by the SEC.
The ARIP was introduced to onboard firms that had already commenced operations before the release of the Rules on Virtual Asset Service Providers in May 2022. This program aims to integrate these firms into the formal regulatory framework while allowing them to innovate and expand in a controlled environment.
The SEC’s recent moves reflect a broader strategy to integrate digital assets into Nigeria’s financial ecosystem. The introduction of the ARIP and RI Programmes demonstrates the commission’s proactive approach to managing the dynamic and rapidly evolving digital finance sector. It is noteworthy that other applications are currently being assessed and may receive “Approval-in-Principle” on a case-by-case basis as they meet all SEC requirements.
Earlier, the SEC granted approval to NASD Plc to launch its Digital Securities Platform (N-DSP), paving the way for formal trading in digital assets. This approval followed the lifting of the ban on trading digital assets by the Central Bank of Nigeria (CBN). NASD, in collaboration with Blockstation Incorporation, worked closely with the SEC to develop a regulatory framework for crypto and digital assets. This collaboration led to the launch of the NASD Digital Securities Platform (N-DSP), a significant milestone in Nigeria’s journey towards embracing digital finance.
The Managing Director of NASD Plc, Eguarekhide Longe, highlighted the company’s objective to empower millions of young investors with access to promising digital assets in a fully compliant and secure investment environment. “Nigeria currently ranks second globally for blockchain wallets, and our Exchange is poised to support high-quality assets, thriving on the blockchain,” Longe said.
Chief Executive Officer of Blockstation Incorporation, Jai Waterman, noted that the integration of digital assets with traditional financial institutions signals a transformative era for Nigeria’s economic landscape. “The integration of cutting-edge technology to address the needs of, and captivate the substantially large youthful population, is set to unlock previously untapped markets. We are confident that this platform will play a pivotal role in propelling Nigeria into a new era of economic growth and development,” Waterman added.
The potential impact of Nigeria’s digital economy is enormous. PwC Africa, citing World Bank estimates, has projected that Africa’s digital economy could contribute up to $180 billion to Gross Domestic Product (GDP) by 2025, creating millions of jobs and opportunities for entrepreneurs, particularly for youth and women.
With the SEC’s forward-looking regulatory approach and the approval of key digital asset exchanges like Busha and Quidax, Nigeria is well-positioned to harness this potential, driving financial inclusion, innovation, and economic growth across the country. As digital assets become more integrated into Nigeria’s financial system, the future looks bright for a more inclusive, dynamic, and resilient economy.
