The Securities and Exchange Commission (SEC) of Nigeria is debating whether to approve cryptocurrency exchanges that provide equity, debt, and property-backed tokens.
In particular, the SEC intends to use this tactic to increase market participation in Nigeria. The regulator also intends to uphold the Central Bank of Nigeria’s position that it will not allow its citizens to trade cryptocurrencies.
The SEC’s chief of securities and financial services, Abdulkadir Abbas, reaffirmed the agency’s objectives, stating that the commission would “…like to start, as a regulator, with a very simple clear proposal before we go into the complex ones.”
As things stand, the watchdog has started to examine requests for digital transactions. These cryptocurrency exchanges will be subject to a one-year regulatory incubation period, during which they will be closely supervised by the SEC, in accordance with the laid-out blueprints. These organizations would only provide a constrained range of services during the one-year regulatory incubation period.
The Nigerian regulator will ultimately determine if the exchange is capable of offering the necessary products and services. Abbas said, “By the 10th month, we should be able to decide whether to register the firm, extend the incubation period, or even ask the firm to stop operating,” in an interview with Bloomberg.
The Central Bank of Nigeria still prohibits cryptocurrency
Relationships between local financial institutions in Nigeria and cryptocurrency exchanges are currently prohibited. The regulator has so verified that in order for any exchange to be registered, an agreement must be reached with the Central Bank of Nigeria.
The nation’s central bank banned cryptocurrencies and forbade any transactions with organizations connected to the cryptocurrency industry, according to a letter dated February 5th, 2021.
Local banks were urged to terminate accounts held by people or businesses who trade cryptocurrencies. At this point, Changpeng Zhao, the CEO of Binance, encouraged Nigerian cryptocurrency dealers to withdraw their Naira and protect their gains.