The Securities and Exchange Commission (SEC) explained that it granted approval in principle to two crypto exchanges recently to give Nigerian youths the opportunity for capital market participation.
The Director General of SEC, Dr Emomotimi Agama, stated this in a statement issued by the Commission on Wednesday.
According to Agama, the decision to approve the crypto exchanges stems from a need to create an inclusive financial ecosystem that leverages the growing interest in digital assets among the country’s younger population.
He added that the initiative aligns with President Bola Tinubu’s vision to engage Nigerian youths more actively in the financial markets.
Response to global trends
Aside from the goal of attracting Nigerian youths to participate in the capital market, the SEC DG said the decision was also influenced by global trends.
“It is crucial that we respond to the global trends in digital finance. SEC is committed to ensuring that Nigeria remains competitive and innovative in the global financial markets.
“We are building the necessary talent and infrastructure to manage the challenges and opportunities that these new asset classes present,” he said.
- Agama emphasized that many young Nigerians are already deeply involved in cryptocurrency trading, and rather than shutting them out, the SEC aims to integrate them into the formal capital market.
- He added that President Tinubu’s intention is to include young Nigerians in the capital market, which is why SEC is focused on ensuring there are robust regulations in place to protect investors and develop the market.
Cautious approach to regulation
He, however, noted that the SEC is proceeding with caution to ensure that the crypto exchanges do not pose significant risks to the national economy or investors.
- Agama said that the commission’s oversight of digital asset exchanges emerged from its Virtual Assets Service Providers Regulation, which was developed to understand the unique nature of cryptocurrency exchanges and the broader digital financial ecosystem.
- He added that the approval-in-principle granted to Busha Digital and Quidax Technologies is part of a controlled regulatory experiment.
“These companies, having met the SEC’s stringent fit-and-proper-persons test and other regulatory guidelines, are now part of the regulatory incubation process.
“This process allows the SEC to closely monitor their activities, assess the risks they pose, and ensure they operate within a framework that protects both the economy and individual investors.
“The regulatory incubation program allows us to study these exchanges in detail, understand the risks they might pose, and provide the necessary guidance and regulations to ensure they operate smoothly and ethically.
“We are committed to making sure these platforms operate under regulations comparable to those in other jurisdictions,” Agama explained.
Backstory
Nigeria’s SEC last Thursday announced that it had granted an Approval-in-Principle to two crypto exchanges Quidax and Busha, giving them the status of legally recognised crypto trading platforms in the country.
- The two exchanges were approved under the Accelerated Regulatory Incubation Program (ARIP) program of the Commission.
- In addition to that, the Commission also admitted four companies to test their models and technology under its Regulatory Incubation (RI) Program.
- The four firms are digital assets offering platforms, which include Trovotech Ltd, Wrapped CBDC Ltd, Dream City Capital, and HousingExhange.NG Ltd.
- The SEC noted that the announced firms are not the only entities that have applied to ARIP and the RI Program.
- It added that other applications received are being assessed and would be granted approval in principle on a case-by-case basis as they meet all its requirements.