Nigerian Crypto Startups Seek SEC Licenses in The Wake of CBN Lift of Ban
In the wake of the Central Bank of Nigeria (CBN) lift of the ban on crypto transactions, Nigerian crypto startups are reportedly pushing for SEC licenses.
Exchanges such as Quidax, Luno, and Yellow Card, amongst others, are racing to secure licenses from the Security Exchange Commission (SEC), which marks a pivotal shift for the crypto industry in Nigeria, indicating a strategic move by startups to navigate regulatory changes.
Discussions with regulators reportedly began in October 2023, highlighting the crypto industry’s efforts to align with regulatory changes. While the ban’s removal facilitates business for crypto startups, experts have cautioned that market transformation may not happen instantly, emphasizing the need for user-friendly platforms to drive adoption.
In Nigeria, interest in bitcoin and stablecoins – crypto tokens whose monetary value is pegged to a stable asset to protect from wild volatility, increased when the naira’s value plunged, particularly during the most extreme drops in June and July of 2023,
This spurred people to look for opportunities to hedge against the devaluation of the naira and the persistent economic decline. As of mid-2023, Nigeria’s volume of crypto transactions grew 9% year-on-year to $56.7 billion.
Whilst some of this growth is due to the weakening of the Naira and increasing interest in cryptocurrencies as a store of value, cryptocurrency often serves a range of different financial purposes in Nigeria.
Also, Nigeria leads the world in terms of P2P transaction volume, with the wider sub-Saharan Africa region having the highest proportion of retail transfers in the world, suggesting a high level of grassroots cryptocurrency adoption for payments, remittances, and more.
The Central Bank’s removal of a two-year restriction on cryptocurrency transactions has taken a positive posture towards digital currency adoption in the country.
However, banks and other financial institutions are still prohibited from holding, trading, or transacting in cryptocurrencies on their account. Experts say that due to the volatility of crypto funds, implementing checks across the board makes perfect sense to safeguard customer funds.
