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”.
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