Nigeria – Could new SEC crypto rules be a blueprint for the United States?

• Nigeria has a cryptocurrency holding rate of 6.50%, signaling rapid growth in the face of regulatory challenges
• The Nigerian SEC has now implemented new rules and ARIP to effectively secure digital asset markets

The popularity of cryptocurrencies is growing around the world, and the latest data from Triple.A confirms this trend. In fact, as of 2024, an estimated 6.8% of the world’s population owns cryptocurrencies, translating to over 560 million users worldwide.

Among countries making significant moves on this front, Nigeria stands out with a cryptocurrency ownership rate of 6.50%. This is another sign of Nigeria’s growing acceptance and influence in the global crypto landscape.

The Nigerian SEC is moving towards cryptocurrency adoption

The Securities and Exchange Commission of Nigeria (SEC) is in the news after updating its regulations on the issuance of digital assets, offering platforms, exchanges and custody.

In a public statement, the SEC explained that these changes are intended to create a stronger regulatory framework tailored to the specific challenges facing digital asset markets.

“The purpose of the amendment is to expand the scope of regulation in line with the current reality.”

The aim of these revised rules is to address the complexities and risks associated with digital assets, ensuring a safe, well-regulated environment for all stakeholders.

Is there more to it?

Additionally, as part of its efforts to regulate the cryptocurrency market, the Nigerian SEC has also launched the Accelerated Regulatory Incubation Program (ARIP) for Virtual Asset Service Providers (VASPs). Here, ARIP provides a structured process for VASPs to meet new regulatory requirements.

To simplify the process, SEC has also created a dedicated application window on its ePortal for participating VASPs wherein the implementation process must be made mandatory within 30 days of the issuance of the circular.

This initiative would streamline the compliance process and ensure that VASPs operate within an updated regulatory framework.

Nigeria’s long-term efforts

It is important to note here that despite previous regulatory challenges, Nigeria has seen significant growth in cryptocurrency adoption.

In December 2023, the Central Bank of Nigeria (CBN) lifted its ban on cryptocurrency transactions for 2021, introducing new guidelines aimed at combating money laundering and terrorist financing. These rules currently require VASPs to comply with Know Your Customer (KYC) requirements, but have also raised concerns about user privacy.

Nevertheless, Nigeria has emerged as a leader in peer-to-peer (P2P) cryptocurrency trading volume and overall transaction growth, driven by the popularity of stablecoins as an inflation hedge.

Should the US learn from Nigeria?

As the cryptocurrency market evolves, Nigeria’s regulatory approach serves as a model for other countries such as the United States. Especially since, given their rapid adoption, they also deal with the regulation of digital assets.

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