SEC declares crypto firms, others operating without office in Nigeria illegal in new onboarding framework

Nigeria’s Securities and Exchange Commission(SEC) has listed the establishment of an office in Nigeria as part of the eligibility requirements in its special framework program for the onboarding of Virtual Assets Service Providers [“VASPs”] tagged Accelerated Regulatory Incubation Programme [“ARIP”]. 

In a circular dated June 21, 2024, tagged “Framework On Accelerated Regulatory Incubation Program (ARIP) For The Onboarding Of Virtual Assets Service Providers (VASPs)”, SEC directed all operating and prospective VASPs (including crypto brokers/dealers) to visit the SEC ePortal to complete the application process no later than 30 days from the date of the Circular. 

SEC states that while the rules on Digital Assets Issuance, Offering Platforms, Exchange and Custody are going through an amendment process, virtual assets service providers must come under the ARIP for now.  

Virtual assets are any digital representation of value that can be digitally used in transactions, crypto, for instance

Details of the special window 

 SEC is a federal government agency responsible for regulating and developing the Nigerian Capital Market.  

The main purpose of ARIP is to accelerate the onboarding of Entities whose applications have been filed with the Commission, and for other potential applicants seeking to be registered with the Commission. 

The program enables “qualified entities” to obtain approval in principle from the Commission pending when the Digital Assets Rules become operational.  

Among others, the framework applies to virtual asset service providers and token issuers that carry on business activities in Nigeria or offer services to Nigerian consumers including platforms that facilitate the offering, trading, exchange, custody and transfer of virtual/digital assets. 


Entities who can apply for the ARIP shall have  the following: 

  • Be incorporated and have an office in Nigeria and its Chief Executive Officer/Managing Director or its equivalent shall be resident in Nigeria.  
  • Be performing investments and securities business; 
  • Be seeking registration or have pending virtual asset-related applications with the Commission.  

Application requirements 

An Entity seeking to operate within ARIP shall submit a sworn undertaken showing its owner or its firm has not been convicted for fraud or dishonesty within or outside Nigeria.  

The applicant must have an operational plan and a business model which has a clear or unique value proposition or will contribute to the overall development of the capital market.  

The applicant must show satisfactory provisions regarding the protection of investors and public interest, among others.  

The processing fee is fixed at N2 million while applicants must supply evidence of required shareholder funds.  

Records and reporting requirements for Virtual Assets Providers 

ARIP participants are expected to do the following for the Commission: 

  • Submit Weekly and monthly trading statistics (where applicable) and all reporting requirements. 
  • Submit quarterly financials as well as compliance reports to demonstrate its compliance with conditions imposed by the Commission. 
  • Submit key issues arising from misconduct, fraud or operational incident reports and, if any, measures taken by the Participant to address such incidents.  
  • Submit actions or steps taken to address customer complaints, emergent risks, or other issues relevant to the Commission’s assessment of applicable regulatory requirements. 

Furthermore, all ARIP participants shall be subject to the Commission’s onsite and off-site inspection, audit and monitoring and shall make such periodic reports and returns as may be specified by the Commission. 

“The Commission may require ARIP participant to furnish it, at such time and in such manner as it may direct, with such information as the Commission may reasonably require for the proper discharge of its functions under this framework. 

“ARIP participant shall make its premises, systems, books and records readily available to the Commission, or its officers or any person appointed by the Commission for inspection, audit and other supervisory purposes, ” the framework stated.  


The window states the following: 

“ARIP participants who fail to comply with any of the stipulated requirements shall be liable to a penalty of not less than N5,000,000 (Five Million Naira, only) at the first instance and further N200,000 (Two Hundred Thousand Naira, only) for every day of default. Other administrative sanctions as provided for in the Commission’s Rules and Regulations may also apply depending on the severity of the violation(s). 

“A penalty of not less than N20,000,000 (Twenty Million Naira, only) shall immediately apply to all commercialized VASPs operating trading, offering and custody platforms without due authorization or registration by the Commission. 

” A penalty of not less than N10,000,000 (Ten Million Naira, only) shall immediately apply to all other digital investments platforms including crypto brokers/dealers, advisers, market makers etc. operating without due authorization or registration by the Commission. 

“Appropriate sanctions including suspension from capital market activities shall apply to entities who fail to comply with the Rules and regulations of the Commission”. 


At the expiration of the ARIP period, participants enrolled on the special window will be given formal approval registration by the SEC to operate in the Nigerian capital market subject to compliance with all applicable existing Rules and Regulations.  

More Insights 

  • The tightening of digital regulatory frameworks comes after a director at  SEC, Abdulkadir Abbas, had told the Federal High Court, Abuja, that an unregistered cryptocurrency exchange platform, Binance  Limited, used its Naira peer-to-peer (P2P) virtual feature to devalue the Nigerian currency. 
  • By this special window, a platform like Binance may be ineligible to be registered in Nigeria following the conviction of its founder in the US and fines imposed on the platforms in other jurisdictions. 
  • SEC had said the ongoing digitization moves will play a crucial role in setting a new standard for capital raising in Nigeria and enable the capital market to support the achievement of the US$1 trillion economy target of the current administration. 

-By Nnaemeka Onyekachi

Leave a Reply

Your email address will not be published.

You may use these <abbr title="HyperText Markup Language">HTML</abbr> tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>