The Securities and Exchange Commission (SEC) has granted two digital asset exchanges “approval-in-principle” to commence operations under its Accelerated Regulatory Incubation Programme (ARIP).
The SEC announced in a statement on Thursday that Busha Digital Limited and Quidax Technologies Limited are the companies receiving approval.
This approval comes a week after the commission revealed plans to license providers of virtual assets—including cryptocurrencies—to support youths and protect investors as adoption rates surge in Nigeria.
The SEC explained that the ARIP involves different cohorts, including 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 stated. “It enables individuals and businesses in Nigeria and other developing economies to access basic digital asset investment services. Busha’s customers use mobile and web applications to buy, sell, store, send, receive, trade, and invest 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 added that Quidax also utilizes 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. These firms are Trovotech Ltd, Wrapped CBDC Ltd, HousingExchange.NG Ltd, Dream City Capital, and Blockvault Custodian Ltd.
“The SEC recently introduced the ARIP to strategically onboard firms that commenced operations prior to the release of the rules on virtual asset service providers in May 2022,” the agency said. “Conversely, the RI Programme 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 noted that the current cohort of the ARIP and the RI programme is characterized by the increased use of distributed ledger technology (DLT) in creating and trading crypto assets. The outcome of this process will inform further policy development, the SEC added.
“Tests will be conducted on a short-term and small-scale basis, and the SEC will 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 are in place for each product or service.”
The SEC further stated that the two firms are not the only entities that have applied to the ARIP and the RI programmes. Other applications are being assessed and will be granted approval-in-principle on a case-by-case basis as they meet all requirements.
“The SEC uses this medium to reiterate that only approved digital exchanges and platforms are legally authorized to conduct 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 advised the public to refrain from dealing with illegal operators who have not applied to or received approval under the ARIP or the RI programme. The agency also reminded prospective investors to always confirm from the relevant information portals whether entities “purporting to provide investment services are legally empowered to do so.”
