SEC grants two cryptocurrency firms approval to operate

The Securities and Exchange Commission (SEC) says it has granted two digital assets exchanges “approval-in-principle” to commence operation under the accelerated regulatory incubation programme (ARIP).

SEC, in a statement on Thursday, said the companies approved are Busha Digital Limited, Quidax Technologies Limited.

The approval comes a week after the commission disclosed plans to license providers of virtual assets — including cryptocurrencies — to support youths and protect investors as adoption rates surge in Nigeria.

The SEC said the ARIP involves different cohorts, which comprise two digital asset exchanges, four digital asset offering platforms and one digital asset custodian.

“Busha operates a digital exchange that facilitates the buying and selling of crypto assets with fiat currency,” the agency said.

“It enables individuals and businesses in Nigeria and other developing economies to access basic digital asset investment services.

“Busha’s customers use the mobile and web applications to buy, sell, store, send, receive, trade and invest and make payments in cryptocurrencies.

“Quidax Technologies Limited operates a cryptocurrency trading platform in Nigeria. The platform leverages blockchain technology to list and trade already issued crypto tokens (assets).

“The services are provided via a proprietary blockchain owned and controlled by Quidax. The exchange platform is both web and mobile enabled for ease of access and use.”

The SEC said Quidax also utilises digital wallets to enable its users to store, receive, and transact in “a variety of cryptocurrencies”.

According to the statement, five firms have been admitted to test their models and technology under the SEC’s regulatory incubation programme.

“They are Trovotech Ltd, Wrapped CBDC Ltd, HousingExhange.NG Ltd, Dream City Capital and Blockvault Custodian Ltd,” the agency said.

“The SEC recently introduced the ARIP to strategically on-board firms which had commenced operations prior to the release of the rules on virtual asset service Providers in May 2022.

“Conversely, the RI Program was created to assess the business models of digital assets firms and test innovative products, services and technology in a real-time market environment under close supervision by the SEC.”

The commission said the current cohort of the ARIP and the RI programme is characterised by the increased use of distributed ledger technology (DLT) in creating and trading crypto assets.

The outcome of the process would inform further policy development, SEC added.

“Tests would be conducted on a short-term and small-scale basis and the SEC would continue to work with the participating firms to agree on testing parameters as well as robust consumer safeguards,” the agency added.

“The referenced approvals-in-principle are a precursor to the grant of full registration by the SEC and are meant to ensure that appropriate protection and transparency is in place in respect of each product or service”.

‘OTHER APPLICATIONS ARE BEING ASSESSED’

The SEC further said the two firms are not the only entities that have applied to the ARIP and the RI programmes.

The commission said other applications received are being assessed and would be granted approval-in-principle on a case-by-case basis as they meet all the requirements.

“The SEC uses this medium to reiterate that only approved digital exchanges and platforms are legally authorized to carry out the business of crypto trading in any form in Nigeria,” the regulator said.

“In this regard, the ARIP and RI remain the only avenues for well-intentioned entities to legitimately introduce their digital products and services to the Nigerian Capital market”.

The SEC, therefore, advised the public to refrain from dealing with illegal operators who have not applied to and received approval under the ARIP or the RI programme.

The agency also reminded intending investors to always confirm from the various information portals whether entities “purporting to provide investment services are legally empowered to do so”.