Nigeria’s Securities and Exchange Commission (SEC) has mandated all Virtual Asset Service Providers (VASPs), including cryptocurrency companies, to establish offices in Nigeria as part of the eligibility requirements under its Accelerated Regulatory Incubation Programme (ARIP). This initiative is designed to speed up the registration and onboarding process for VASPs in preparation for the upcoming Digital Assets Rules, with a strong emphasis on compliance and investor protection. Non-compliance will result in significant penalties, including fines.
In a circular dated June 21, 2024, titled “Framework On Accelerated Regulatory Incubation Program (ARIP) For The Onboarding Of Virtual Assets Service Providers (VASPs),” the SEC instructed all potential and existing VASPs, including crypto brokers and dealers, to visit the SEC ePortal and complete the application process within 30 days of the circular’s date. While the rules on Digital Assets Issuance, Offering Platforms, Exchange, and Custody are still being amended, the SEC has specified that VASPs must adhere to the ARIP requirements in the interim.
The SEC, a federal government agency responsible for regulating and developing the Nigerian Capital Market, aims to use the ARIP to fast-track the onboarding of entities that have filed their applications with the Commission, as well as prospective applicants seeking registration. Under the ARIP, “qualified entities” can obtain approval in principle from the SEC until the Digital Assets Rules become fully operational.
The framework applies to Virtual Asset Service Providers (VASPs) and token issuers that operate in Nigeria or offer services to Nigerians. To be eligible for the Accelerated Regulatory Incubation Programme (ARIP), companies must be incorporated in Nigeria, have a physical office in the country, and ensure that their Chief Executive Officer (CEO), Managing Director (MD), or equivalent resides in Nigeria.
Applicants must also be actively involved in the investments and securities business and either plan to register or have already submitted virtual asset-related applications to the Commission. Additionally, any entity seeking to join the ARIP must provide an affidavit confirming that the owner or firm has not been convicted of fraud, either domestically or internationally, and must pay a processing fee of ₦2 million.
Upon approval, ARIP participants are required to submit weekly and monthly trading statistics, quarterly financials, and compliance reports to the SEC. They are also subject to the SEC’s onsite and offsite inspections, audits, and monitoring. Non-compliance with ARIP requirements will result in fines of at least ₦5,000,000 for the first violation and ₦200,000 for each subsequent day of non-compliance. VASPs operating without SEC authorization will face fines of ₦20 million and may be suspended from the capital market.