The Securities and Exchange Commission (SEC) of Nigeria has announced plans to accelerate the issuance of cryptocurrency licences in 2025, aiming to bring more clarity to the country’s growing crypto market. This initiative is part of the SEC’s broader strategy to regulate digital assets and enhance consumer protection in a largely unregulated industry.
Since launching the Accelerated Regulatory Incubation Programme (ARIP) in June 2024, the SEC has granted provisional licences to two Nigerian crypto startups—Quidax and Busha. At a recent December 2024 workshop, the SEC expressed its intention to “move a lot faster” in issuing more licences this year.
Nigeria’s Burgeoning Crypto Market and Growing Risks
Nigeria is one of Africa’s most active crypto markets, where individuals and businesses rely on cryptocurrencies and stablecoins to hedge against inflation and exchange rate volatility. However, the absence of clear regulations has left many users and investors exposed to significant risks.
A recent report by Busha found that nearly 50% of surveyed crypto users and non-users cited security concerns as a major barrier to adoption. On centralized exchanges, a single error can result in financial losses. Peer-to-peer (P2P) transfers also pose risks, particularly for new users unfamiliar with how blockchain networks work or how to reduce transaction fees.
“Rug-pull scams are prevalent, especially with the rise of meme coins,” said Chibunna Kingsley, a crypto trader in Lagos. These scams involve developers artificially inflating a token’s value before selling off their holdings, causing prices to crash and leaving investors with heavy losses.
“Scammers thrive in the crypto space,” Kingsley added. “If you find ways to take advantage of those who don’t know what they’re doing, that’s where the most money is made. It’s right for people to feel unsafe.”
While many crypto platforms have focused on user education, regulators must play a central role in safeguarding consumers.
From Crypto Ban to Regulatory Incubation
Nigeria’s crypto journey has evolved significantly since September 2020, when the SEC first proposed a framework for regulating virtual assets. By 2021, however, the Central Bank of Nigeria (CBN) issued a ban prohibiting banks from servicing crypto companies, forcing startups to find alternative banking solutions.
In December 2023, the CBN lifted the ban and provided new guidelines for banks to engage with crypto startups. This allowed companies like Quidax, Busha, and Yellow Card to access banking services under a regulatory sandbox environment through the ARIP initiative.
Under the ARIP program, crypto startups must pay a ₦200,000 assessment fee and a ₦2 million non-refundable processing fee to apply for a provisional licence.
“The process was thorough,” said Tobenna Igweonu, a lawyer representing Quidax. “We answered questions on the SEC’s e-portal, paid the application fee, and participated in a demo where we demonstrated how funds flow through our platform.”
Provisional Licences and Compliance Scrutiny
In August 2024, Quidax became the first Nigerian crypto startup to receive a provisional licence, with full licensure expected within 12 months if it meets the SEC’s regulatory requirements. During demo sessions, SEC officials scrutinized compliance setups, focusing on consumer protection measures and the companies’ ability to detect and flag suspicious user activity.
Despite these advances, banks remain cautious about working with crypto companies. Many startups are still disguised as investment firms to avoid scrutiny, a banker explained.
“The challenge is that banks don’t directly associate with crypto companies,” the banker added. “They simply work with them as investment firms to reduce risks.”
The Path Forward: Boosting Investor Confidence and Consumer Protection
As the SEC continues to refine its regulatory framework, clearer guidelines could attract institutional investors and encourage banks to explore crypto partnerships more confidently. A transparent regulatory environment would also enable the taxation of crypto transactions, a move Nigeria has been exploring since 2022.
“The ARIP is one of the boldest regulatory efforts by any African regulator to oversee the crypto sector,” said Chuta Chimezie, a member of the Nigerian Blockchain Committee.
However, the SEC must strike a delicate balance between encouraging innovation and ensuring compliance. Over-regulation could stifle growth, while under-regulation leaves consumers vulnerable. The commission has promised to foster an environment that supports growth while protecting users, but how this balance will be achieved remains an open question.
With plans to fast-track crypto licences in 2025, Nigeria is positioning itself as a leader in Africa’s crypto regulation landscape, signaling a new era of accountability and opportunity for the sector.