Crypto Analyst Urges SEC to Review Local Exchange Licensing

In a recent interview with Cointelegraph, Nigerian crypto analyst Rume Ophi highlighted concerns about the licensing requirements imposed by the Securities and Exchange Commission (SEC) on local crypto exchanges. Ophi urges the SEC to reconsider its guidelines for virtual asset services providers (VASPs).

Financial Barriers for Local Exchanges

Ophi expressed worries that the current regulations favor foreign exchanges over local ones. Notably, the upfront capital requirement of 500 million naira ($556,620) poses a significant challenge for many local exchanges.

Foreign Dominance Threatens Market Balance

This financial burden might result in foreign exchanges dominating the Nigerian crypto market, hindering the development of a balanced ecosystem. To address this issue, Ophi and legal representative Kue Barinor Paul propose potential mergers among local crypto exchanges and VASPs to pool resources and meet SEC license requirements.

Call for SEC Licensing Framework Revision

Paul emphasized the necessity for the Nigerian SEC to revise its licensing framework. The existing regulations, as pointed out by Ophi, do not prioritize local exchanges during formulation, potentially leading to an uneven playing field.

SEC's Attempt to Establish Framework

In May 2022, the SEC released a comprehensive document titled "New Rules on Issuance, Offering Platforms, and Custody of Digital Assets." The aim was to establish a framework for cryptocurrency service providers in Nigeria, including guidelines for engagement with digital assets by banking and financial institutions.

Nigerian National Assembly's Role

Ophi stressed the importance of the Nigerian National Assembly's involvement in aligning the SEC's licensing requirements with the country's economic realities. Nigeria, as the largest economy in Africa, ranks second globally in crypto adoption, according to Chainalysis’ “2023 Cryptocurrency Geography Report.”

Challenges in Attracting Foreign Investment

Despite the country's potential, attracting foreign crypto investment has been challenging. Ophi attributes this to the recent lifting of the ban on financial institutions serving crypto exchanges.

While Nigeria's crypto awareness is high, challenges persist in attracting foreign investment. Ophi attributes this to regulatory hurdles, urging the SEC to reconsider its stance for the sake of a flourishing local crypto market.